Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

MIDLAND METRO (PENALTY FARES) BILL [Lords]

Read a Second time, and committed.

FRASERBURGH HARBOUR ORDER CONFIRMATION BILL

Read the Third time, and passed.

Oral Answers to Questions — ENVIRONMENT

Local Government Finance

Mr. Buckley: To ask the Secretary of State for the Environment if he will review the poll tax-capping rules announced on 31 October; and if he will make a statement.

The Minister for Local Government and Inner Cities (Mr. Michael Portillo): As I told the House last week, my right hon. Friend sticks firmly by the intentions announced by my right hon. Friend the Member for Bath (Mr. Patten).

Mr. Buckley: I welcome the point made by the Minister. When considering a review of poll tax-capping, will he consider poll tax-capping high-spending Conservative councils which are levying a rate well beyond that levied by some Labour councils that have already been capped? Will he also consider the consequences of poll tax-capping on the police and fire services? I understand that if the capping system is upheld the number of police personnel in West Yorkshire will be reduced by 500 by 1992. Does the Minister appreciate—[HON. MEMBERS: "Too long."] It may be too long, Mr. Speaker, but you will appreciate its importance.
Given the increase in crime, it would be detrimental to preventing further increases if police personnel were cut in West Yorkshire.

Mr. Portillo: West Yorkshire police authority made representations and had a meeting with the Parliamentary Under-Secretary, my hon. Friend the Member for Salisbury (Mr. Key).
Of course we shall apply the criteria for capping equally to authorities of different political persuasions.
As for why charges can be higher in one place than in another, yet capping applies to some authorities and not to others, I remind the hon. Gentleman that the charge payers in his authority benefit from a payment of £111

from the safety net and payers in next-door Barnsley benefit from a payment of £150 from the safety net. That makes a big difference.

Mr. Butler: If the size of the charge is partly responsible for its unpopularity, why not set a low maximum cap of, say, £200, with a more generous settlement from the centre, so that we penalise councils that try banditry on their citizens and let more efficient authorities deliver even lower charges?

Mr. Portillo: I am grateful to my hon. Friend for what his question implied: his support for the policy of capping authorities and ensuring that the benefits are passed on to community charge payers. The detail of his proposal takes us wider than Question 1—possibly into the territory of Question 2 with which my right hon. Friend will deal shortly.

Mr. Steinberg: To ask the Secretary of State for the Environment how many suggestions he has received for alternatives to the community charge; and if he will make a statement.

The Secretary of State for the Environment (Mr. Michael Heseltine): With permission, Mr. Speaker, I shall answer this question and Questions 3, 6, 10, 11, 12, 14 and 15 together.

Mr. Ian Bruce: To ask the Secretary of State for the Environment if he will make a statement on the review of the community charge.

Mr. Matthew Taylor: To ask the Secretary of State for the Environment if he has any plans to amend further the community charge.

Mr. Nellist: To ask the Secretary of State for the Environment what is the progress of his latest review of the poll tax; and if he will make a statement.

Mr. Bill Michie: To ask the Secretary of State for the Environment how many representations he has received from hon. Members to make changes to the community charge; and if he will make a statement.

Mr. Harry Barnes: To ask the Secretary of State for the Environment what proposals he has for changes to the community charge; and if he will make a statement.

Mr. Haynes: To ask the Secretary of State for the Environment what are the number of suggestions made to him for alternatives to the community charge; and if he will make a statement.

Mr. McAllion: To ask the Secretary of State for the Environment if he will make a statement on the review of the poll tax.

Several Hon. Members: On a point of order, Mr. Speaker.

Mr. Speaker: Order. I call the Opposition Front-Bench spokesman.

Mr. Gould: On a point of order, Mr. Speaker. If the Secretary of State groups all these questions together, he distorts the pattern of interests represented on the Order Paper. That will mean that we have a much shorter time in which to deal with these questions than we would if proper supplementaries were asked in respect of each question. I ask you, Mr. Speaker—[Interruption.]

Mr. Speaker: Order. How can I possibly hear when this shindig is going on?

Mr. Gould: I ask you, Mr. Speaker, to prevail on the Secretary of State to group these questions in a more sensible manner—perhaps three or four in a group—so that we can properly debate each question on the Order Paper.

Mr. Speaker: It is not for me to group questions; it is a matter for the Secretary of State. If he wants to group them in a certain way, that is up to him.

Mr. Heseltine: If it is not a matter for you, Mr. Speaker, I find it difficult to reply to a point of order. However, I shall follow the thrust of what you said and tell the House that the questions are substantially the same and, therefore, my answers are unlikely to be different. In the space of the half hour or so that separates the questions I would be saying the same thing at the end of the half hour as at the beginning.

Several Hon. Members: On a point of order, Mr. Speaker.

Mr. Speaker: Order. This takes up a great deal of time. There is some help when questions are grouped because it enables us to get further down the Order Paper and gives more hon. Members a chance. It is a matter for the Secretary of State. It is not for me to say, of course, but he might perhaps consider grouping Questions 3, 6 and 10 and taking the others separately.

Mr. Heseltine: May I add one further point? There is another group of questions further down the Order Paper, all of which again repeat the point that is addressed in Question 2. I should like to answer the substance of the question by saying that I have started a careful and fundamental review of the community charge.

Mr. Steinberg: I am sorry that my question has caused so much disarray. I did not realise that it was so controversial. I should be grateful to the Secretary of State if he would inform the House whether he agrees with his right hon. Friend the hon. Member for Blaby (Mr. Lawson) who suggests that the poll tax should be scrapped and replaced by a property tax, which is what the Labour party has been saying for the past three years.

Mr. Heseltine: My right hon. Friend the Member for Blaby (Mr. Lawson) has made a most interesting and constructive suggestion for the review that I am carrying out. I am sure that the hon. Gentleman will recognise that at no stage during all the discussions on these matters have Conservative Members been able to provide 57 different suggestions about how to deal with this matter, which is the number provided by the Labour party.

Mr. Ian Bruce: If my right hon. Friend has had a chance to read the Labour party document on fair rates, he will know that it is not a fully worked-out scheme but a wishy-washy set of wishes which does not take us any further forward. Will he assure his hon. Friends that in his review he will make sure—as the Labour party does not make sure—that whatever system is devised bears down on local government profligacy and ensures additional Government funding for local authorities, which the Labour party does not call for in its review?

Mr. Heseltine: The whole House will feel that my hon. Friend has been characteristically generous in the way in which he describes the Labour party policy document. We have made it clear that in our review we rule nothing out and rule nothing in. The review will look at all the issues, including those raised by my hon. Friend.

Mr. Matthew Taylor: In previous looks at alternatives to the poll tax, and specifically at local income tax, the Department has used its own version of what a local income tax might be and has never looked in detail at our proposals. It has certainly never published any response to them. Will the Secretary of State now ask his officials to look at our scheme of local income tax and let us know their conclusions? We should be happy to talk to the Secretary of State about that.

Mr. Heseltine: I appreciate the constructive approach of the Liberal Democrats. They obviously have sufficient confidence in their ideas to be prepared to discuss them with me, which is not exactly what one would say about the parliamentary Labour party, although I should add, in fairness, that the Labour party, as represented by the Association of Metropolitan Authorities, has the courage to talk to me about its ideas. In that, it is at marked odds with the Labour party in the House. On the substance of the hon. Gentleman's question, I can tell him that I have received a letter on this matter and I have asked officials to give me advice on it. I am aware of the point made by the Liberal Democrats and I shall try to meet it.

Mr. Nellist: Is the Secretary of State aware that I spent yesterday afternoon in Lincoln prison with Bryan Wright, a 20-year-old unemployed man, who last Friday became the Government's first poll tax prisoner? When the Secretary of State conducts the review will he consider that if Bryan had been born in Glasgow and not in Grantham he would not be in prison, because Scottish law abolished prison for debt 25 months ago? When Bryan is released on or, as is hoped, before Christmas eve, his spirits will be as high then as they were yesterday and, therefore, the vital element of fear which prison is supposed to engender among the 344,000 people who his Department told me on Monday have had liability orders served against them will diminish. Finally, will the right hon. Gentleman confirm that, even if he is not prepared to talk about outright abolition, he will instruct——

Mr. Speaker: Order. This is not a debate. This is Question Time and questions should be about reform of the poll tax not about one of the hon. Gentleman's constituents who is in gaol.

Mr. Nellist: Will the Secretary of State instruct local authorities, during the period of his review, not to take any court action that could send anyone to prison for something that is not a crime and may not even be an offence any longer?

Mr. Heseltine: I had not known that the hon. Gentleman spent yesterday afternoon in prison. I only hope that he does not know something that I do not know and that this does not anticipate events of which I can have no knowledge. What the hon. Gentleman chooses to do with his spare time has nothing to do with reform of the community charge.

Mr. Nellist: Don't be so bloody stupid. That was a serious question about the review of the poll tax.

Mr. Speaker: Order. The hon. Gentleman knows that many things are said across the Floor of the Chamber with which hon. Gentlemen disagree, but he must not use words like that. That is not the way we carry on. [HON. MEMBERS: "Withdraw."] The word was not unparliamentary. It was just offensive, like quite a lot of other things that are said here.

Mr. Michie: As the Secretary of State has not answered my question about the number of representations that have been made, because he lumped together several questions as being on the same subject—although they are not—I have to assume that he has had some representations about the poll tax from hon. Gentlemen. In view of that, will he make it public that the poll tax has been a shambles and has affected hundreds of thousands of our electors and that no amount of fiddling or meddling with it will make it anything better than a bureaucratic disaster? Therefore, will he make it public that a mistake has been made and that it is time that the Government axed the lot?

Mr. Heseltine: If the Labour party had listened to what I had to say last week, rather than shouting so much that nobody else could listen, it would have understood that I am conducting a fundamental review arid, even at this late stage, I hope that the Labour party will contribute to that review.

Mr. Harry Barnes: When conducting a review, those who suggest the review should present some ideas. I should like an answer to the question that I tabled, which is:
what proposals he has for change to the community charge".
For instance, will the right hon. Gentleman take into account the lessons of the history of the poll tax in this country? In 1367, when it was first introduced, it was at a flat rate that the poor did not pay. In 1369, a new banded system was introduced. On that occasion, the rich did not pay. In 1371, they went back to a flat rate which no one——

Mr. Speaker: Order. We do not want a history lesson.

Mr. Heseltine: Before the hon. Gentleman places too much reliance on his interpretation of history, he should understand that we have a certain pride in having one of the oldest and most sophisticated parliamentary democracies, based on universal suffrage. His claim to be above and beyond the law is incompatible with that tradition.

Mr. Haynes: Is the Secretary of State aware that I do not come from or represent Henley? I come from a constituency where they know what work is and they know how they are being dealt with by this wicked Government. Will he do something in his review about the poor beggars having to pay 20 per cent. who cannot afford it and who—unlike him—have to go without a hot meal on the table? When he makes his review, will he get rid of this rubbish and put in its place a system that is fair to all?

Mr. Heseltine: I can only say that if the hon. Gentleman wants to represent the good citizens of Henley, he must stand and I shall dismiss him as I dismissed the Labour candidate at the last election.

Mr. McAllion: Is the Secretary of State aware that all-party consensus on local government finance can be achieved only on the basis of two fundamental principles? The first is that any tax must be related to the ability to pay

and the second is that the poll tax must be abolished. The right hon. Gentleman must try to understand that, until he concedes those two principles in advance, all his talk of consensus will be exposed for exactly what it is—a cynical and calculating attempt to ensnare the minority parties and save the Tories' necks at the next election. It will not work.

Mr. Heseltine: I should be more impressed by that suggestion had not the hon. Member for Dagenham (Mr. Gould), in answer to a question from my hon. Friend the Member for Christchurch (Mr. Adley), anticipated, about five minutes before I proposed it, that such a constructive dialogue could take place.

Mr. Terry Fields: On a point of order, Mr. Speaker. A number of questions have been grouped together. Could not Question 18 also have been included, given that it deals with exactly the same subject?

Mr. Speaker: With any luck, we shall reach Question 18.

Mr. Pawsey: Is my right hon. Friend aware that the review that he has announced will be widely welcomed by the British people? Is he aware, however, that levels of community charge depend on levels of Government funding, which in turn depend on the formula surrounding standard spending assessments? Is he further aware that Warwickshire has been substantially disadvantaged over a number of years by the way in which the SSA system works? Will he undertake to examine the formula used for Warwickshire and provide assistance to that county?

Mr. Heseltine: I know that my hon. Friend has had a dialogue with the Minister responsible and, of course, we shall bear in mind all the points that he has put to us. It is worth adding that, following the announcement of our review, we have managed to secure a substantial victory in a local county by-election in Warwickshire.

Mr. Butcher: Does my right hon. Friend agree that the time has come for free state school education to be a directly funded by the state via the grant-maintained schools formula? As a believer in supply-side economics, does he agree that the additional revenue for that should come not out of income tax but from VAT?

Mr. Heseltine: I assure my hon. Friend that his suggestions today, and any further suggestions that he wishes to put to us, will be carefully taken into account in our review.

Mr. Tracey: Will my right hon. Friend keep constantly in mind in his review the principle that seems to be widely accepted that every adult over the age of 18 should pay some share of the cost of local government? That seems to be one of the best guarantees of true accountability in local councils.

Mr. Heseltine: I understand the importance that many of my right hon. and hon. Friends attach to that principle. We have made it clear that in our review we shall look into all these matters. That is implicit in our initial stance and in the comprehensive nature of the review.

Mr. Cormack: Will my right hon. Friend ensure that the fundamental criterion for any new or amended system is ability to pay?

Mr. Heseltine: My hon. Friend will understand that that is one of the arguments that will have to stand alongside the point put to me by my hon. Friend the Member for Surbiton (Mr. Tracey). All those issues will be on the table.

Mr. Speaker: I call Mr. Adley. [HON. MEMBERS: "Not another one."] Order. If hon. Members look at the Order Paper, they will see that I am being absolutely even-handed.

Mr. Adley: Does my right hon. Friend agree that, as a matter of principle, the more that is spent on raising local taxes and administering them, the less there is to spend at the sharp end? As many erstwhile functions of local government, such as education, the police and the fire service, are heavily overladen with national implications, will my right hon. Friend, during his review, present to the House the actual costs of increases in VAT, income tax or whatever if all the costs of local government were to be funded out of national taxation?

Mr. Heseltine: I am considering how best I can involve the House at large in our review. Certainly, we shall have to have in front of us the calculations to which my hon. Friend referred.

Mr. Marlow: My right hon. Friend made a sensible and generous offer to the Opposition parties to join in discussions with him about the nature, organisation and financing of local government. To date, the Labour party appears to have had some difficulty in responding to his offer. Does he have any helpful suggestions for ways in which the Labour party could involve itself in such an important debate and discussion?

Mr. Heseltine: I am most grateful to my hon. Friend. The Labour party's position is not as depressing as its behaviour in the House suggests. Senior figures in the Labour party in local government have already welcomed and accepted my offer.

Mr. Gould: What has just happened is an abuse of the House. It should be a matter of regret to the whole House that the Secretary of State should have distorted the pattern of questions on the Order Paper and cut short a debate on a subject which is clearly of great interest to all hon. Members and to many millions of people outside the House.
Is not the reason why the right hon. Gentleman took that step perfectly clear? Is not the truth about his review almost as depressing for his hon. Friends as it is for millions of poll taxpayers in general? It is that the poll tax, in all its essentials, will still be with us for at least two years and that, even after his review has been concluded, the poll tax may still survive.
Why will not the right hon. Gentleman admit now what he appeared to be so keen to imply during the Tory leadership contest—that the poll tax is unfair and unworkable and that, as a necessary precondition to any sensible reform, it must be abolished?

Mr. Heseltine: The hon. Gentleman is fully aware that, when I sought last week to explain our views at great length, his party tried to shout down my speech. That was the most flagrant abuse of the House that I can remember for a significant period. Labour Members did that because they are not prepared to enter into the sort of constructive

dialogue that I offered. In that respect, it is not that the country is concerned; it is that the Labour party is isolated.

Mr. Speaker: I call Mr. Strang.

Mr. Campbell-Savours: On a point of order, Mr. Speaker.

Mr. Speaker: Order. If the hon. Gentleman looks at the Order Paper, he will realise that he is disadvantaging a number of his hon. Friends.

Mr. Campbell-Savours: Usually, Mr. Speaker, you call two supplementary questions for each question tabled by a Back Bencher. If the Opposition Front-Bench were included, 24 supplementary questions would have been asked on Question 2. In fact, there were seven supplementaries, so we are owed 17. Can we please have them on this important matter?

Mr. Speaker: Order. The hon. Gentleman's arithmetic may be at fault. I am trying to reach the questions tabled by his hon. Friends the Members for Liverpool, Broadgreen (Mr. Fields) and for Wentworth (Mr. Hardy) and other hon. Members who have questions on the Order Paper. We shall not achieve that at this rate.

Montreal Protocol

Mr. Strang: To ask the Secretary of State for the Environment what progress has been made since the 1990 Montreal protocol review conference in implementing the agreement; and if he will make a statement.

The Minister for the Environment and Countryside (Mr. David Trippier): The Government have been arguing strongly for tighter controls on ozone-depleting substances within the Community than those agreed at the London meeting. We expect to agree a European regulation next week which will achieve that.

Mr. Strang: Is the Minister satisfied with the progress that is being made in Britain? As some of the alternatives that are being promoted are themselves damaging greenhouse gases, may I ask whether the Government have ruled out a levy on CFCs? Some of that money could be used to finance research and development into alternatives.

Mr. Trippier: I am very satisfied with the progress that is being made in Britain, and shortly after the London ozone conference on the Montreal protocol the hon. Member for Dagenham (Mr. Gould) was kind and generous enough to congratulate my right hon. Friend the Member for Bath (Mr. Patten) on the week's achievements. At that time we, with all other countries that attended that conference, had committed ourselves to a removal of CFCs by the year 2000. I am now saying that the British Government believe that that pace can be accelerated. I will be representing the Government in Brussels next week. We have the foremost position and the most ambitious targets and I shall be looking for support from all the other member states at that meeting. I think that we shall get it.

Mr. Squire: Will my hon. Friend confirm that it was only after the Government announced that we were beating the targets of the Montreal protocol that they were criticised by various green parties as being inadequate?
Will my hon. Friend underline his determination to beat targets for carbon dioxide emissions on the same basis —that once we show that it can be done, it is bound to be criticised as inadequate?

Mr. Trippier: A number of what I call dark green lobby groups act irresponsibly, preparing their press notices before looking at any statements from Ministers or even before the introduction of a White Paper.

Mr. Gould: Name one.

Mr. Trippier: Greenpeace is a superb example. It is not the first time that I have made that comment and I am happy to repeat it on any occasion.
My hon. Friend the Member for Hornchurch (Mr. Squire) is right. We are in the lead on the issue and I am proud of that. I am proud of the fact that it was British scientists who discovered the hole in the ozone layer and that we were the first to sign the Vienna convention. On two separate occasions in London we have hosted the ozone layer conference, and it is recognised, nationally and internationally, that the British Government are in the lead.

Mr. Simon Hughes: Does the Minister accept that the importance that environmental issues should have will never be accorded them by the British Government as long as his Department is distracted by subjects such as local government finance, as we have seen today, and housing, both of which are entirely unrelated to environmental policy and should be the responsibility of a separate Department? Is not the reality that we would do far better on subjects such as the ozone layer and reducing CFCs if his Department concentrated on environmental issues instead of regularly distracting Secretaries of State with other matters?

Mr. Trippier: Ministers in the Department of the Environment afford to the environment, internationally and nationally, the attention that that important subject deserves. No fewer than three Ministers are concentrating on the issues—my right hon. Friend the Secretary of State, myself and an Under-Secretary of State. There is a close link between the subjects that come under the aegis of the Department of the Environment. In fact, I heard the hon. Gentleman refer to that himself in a recent speech.

Mr. Summerson: Will my hon. Friend ensure not only that CFCs and other ozone-depleting subjects are not used in Britain or throughout the European Community, but that they are not manufactured in Britain for use elsewhere in the world?

Mr. Trippier: Those are the terms and conditions of the agreement to which we are signatories. That is the commitment that I shall be seeking to honour and develop at the European Council of Environment Ministers in Brussels next week. We want the end of their manufacture by 1997. The signatories of the third world or developing countries to the Montreal protocol have already agreed to such phasing out by the year 2010 because of technology transfer and also because of overseas aid, to which we are prepared to contribute.

Mr. Win Griffiths: Does the Minister agree that the original Montreal agreement, and the improvements made to it in London, were based on excellent scientific research that had no obvious marketplace benefit? As Britain

spends less than a third of what is spent by, for instance, Germany on environmental research, what is the Department doing to encourage the expansion of such research, which clearly has major implications and potential benefits for the planet?

Mr. Trippier: The Department's record on expenditure for research is excellent and far outweighs the amount spent by Labour when it was in office. Last year, the Department's research budget was increased by 20 per cent.—a real-terms increase whose significance the hon. Gentleman should be kind enough to acknowledge.
Research on chlorofluorocarbons is also carried out by the industry, which has achieved success: that is why ICI is now leading other companies in finding substitutes for CFCs.

Telford City Technology College

Mr. Grocott: To ask the Secretary of State for the Environment whether he has any plans to meet the chairman of Telford development corporation to discuss assistance that the corporation is giving towards the planned Telford city technology college.

The Parliamentary Under-Secretary of State for the Environment (Mr. Tim Yeo): I have no such plans.

Mr. Grocott: Will the Minister make it his business to find out the precise details of the red-carpet treatment that Telford development coporation, which he appoints, is giving to this totally unwanted and unnecessary city technology college? Will he find out the precise cost of all the preparatory work done by the corporation, the cost of all the access and infrastructure, the knockdown price at which the corporation has sold the land to the college and the price that the land would have fetched on the open market? When he has found out all those details—if he does not already know them—will he make them available to the House and then send them to the corporation's auditors for their inspection?

Mr. Yeo: The hon. Gentleman has already tried to block the establishment of Telford city technology college by objecting to the relevant planning applications. I am interested to note that he now wishes to advertise still further his hostility to our policy of giving his constituents more educational opportunities and choice.
The role of Telford development corporation has been confined to encouraging this excellent project. There has been no "red-carpet" treatment; a site has been provided at a price that was negotiated having regard to the ground conditions of the land concerned and the educational usage—a price of £420,000.

Several Hon. Members: rose——

Mr. Speaker: Order. This question is about Telford.

Mr. Devlin: Does my hon. Friend agree that the role of a development corporation is to redevelop rundown inner-city centres and to create new opportunities and lifestyles in them? Is not that role fully compatible with that of CTCs, and should not Telford development corporation do all that it can to assit the city technology college, as our development corporation in Teesside is doing?

Mr. Yeo: My hon. Friend is right. The development corporation should have regard to the interests of everyone living in the area and I am entirely satisfied that that is what Telford development corporation has done in this case.

Mr. O'Brien: In view of the Minister's absymal reply to my hon. Friend the Member for The Wrekin (Mr. Grocott) and the fact that he is not prepared to meet the chairman of Telford development corporation, will he prevail on the Secretary of State to introduce some democracy into the corporation? Let us see some of the money that the Secretary of State is pushing on to the poll tax being spent on development corporations.

Mr. Yeo: We are entirely satisfied that Telford development corporation has done an excellent job and I have already had an opportunity of meeting the chairman.

Rural Housing

Mr. Pike: To ask the Secretary of State for the Environment whether he proposes to take any new initiatives to increase the provision of affordable housing in rural areas.

The Minister for Housing and Planning (Sir George Young): Yes. Since 1988, the Government have introduced a number of initiatives to increase the supply of low-cost housing in those rural areas where it is needed. Most recently, we have decided that £50 million of the total of nearly £2 billion of local authority credit approvals in 1991–92 should be set aside for a new programme for low-cost rural housing, mainly through local authority sponsorship of housing association schemes. I have now decided that these resources should be allocated as supplementary credit approvals, to ensure that they are targeted on authorities where they will have the greatest impact, and we shall shortly be inviting eligible authorities to make bids for a share of them.

Mr. Pike: I accept that this may be at least a small step in the right direction. Do not the Government recognise, however, that "Faith in the Countryside" identified a strong feeling that the Government had failed to appreciate that councils provide a major source of housing to meet the needs of the less well-off who want to rent property in rural areas? Does the Minister now intend to make it possible for local authorities to provide the extra housing that is needed, at affordable rents?

Sir George Young: I am grateful for the hon. Gentleman's small tribute at the beginning of his question. This initiative is the responsibility of my predecessor, my hon. Friend the Member for Worcestershire, South (Mr. Spicer), to whose work on housing I pay tribute. As for the hon. Gentleman's substantive question, we have made it clear that we see housing associations rather than local authorities as the main providers of affordable accommodation. Within the Housing Corporation's growing budget, a greater percentage of its resources will go to rural areas.

Mr. Colin Shepherd: I congratulate my hon. Friend on his welcome return to the Dispatch Box. Is he aware that there is considerable concern in South Herefordshire district council that it is being frustrated in discharging its responsibilities as the facilitator and enabler of low-cost

housing for its people? Is he also aware that last year about 97 per cent. of the Housing Corporation's resources for the west midlands area went into the west midlands conurbation, leaving only a small amount for rural areas? Will he tackle the Housing Corporation? We feel very strongly about the matter.

Sir George Young: I am grateful to my hon. Friend. He is right. In a number of villages there is resentment towards second home owners or long-distance commuters who buy up homes, to the disadvantage of those who live locally. I am in touch with the Housing Corporation. It has a special rural programme targeted on the smallest villages, such as the ones referred to by my hon. Friend. By 1992–93 we hope that that programme will rise to 1,850 approvals. Housing associations in rural areas will be able to bid for resources and I hope that my hon. Friend's local authority will be successful.

Mr. Alton: Does the Minister agree that the drift to the cities and the pressure on existing houses in city areas is partly because of the lack of housing for rent in rural areas?

Mr. Nicholas Winterton: Since when has the hon. Gentleman represented a rural area?

Mr. Speaker: Order.

Mr. Alton: Does the Minister therefore agree that yesterday's statement by the bishops of England and Wales about homelessness in Britain could not have come at a more timely moment? What further action does he intend to take to tackle the problem of homelessness?

Sir George Young: A separate question about homelessness appears later on the Order Paper. This question is mainly about rural areas. I have already explained that the Housing Corporation will devote increased resources to the provision of affordable homes in rural areas.

Right to Buy

Mr. Dunn: To ask the Secretary of State for the Environment how many council and new town commission homes have been sold to sitting tenants since 1 January 1980.

Mr. Yeo: It is estimated that between January 1980 and September 1990 almost 1·2 million council and new town commission homes have been sold to sitting tenants in England.

Mr. Dunn: First, may I congratulate my hon. Friend on his appointment. As Conservative Members believe in giving village people a stake in society through the extension of home ownership, will he confirm as soon as possible when he intends to introduce legislation to extend the rents-to-mortgages scheme throughout the length and breadth of the United Kingdom?

Mr. Yeo: I am grateful to my hon. Friend for his kind remarks. His question demonstrates that he, like my other hon. Friends, has the interests and aspirations of tenants at heart. We intend to monitor carefully the progress of the rents-to-mortgages pilot scheme in Basildon which, during the short time that it has been available, has aroused considerable interest. My hon. Friend's encouragement to us will be an important factor to be taken into account


when we decide whether to extend the experiment, although, as he acknowledged, to extend it to all local authority tenants would require primary legislation.

Mr. Clelland: Is the Minister aware that his reply demonstrates that, despite recent events, nothing has changed and that we are being subjected to the same old claptrap from the Dispatch Box? Is he further aware that, contrary to the recently expressed opinions of the Minister for Housing and Planning, local authorities' ability to use the receipts from council house sales to provide additional council housing has been severely restricted, which has led to a complete standstill in the provision of council housing, in Newcastle and Gateshead in particular and in other local authority areas? What will the Government do about the growing army of homeless and inadequately housed people that they have created?

Mr. Yeo: When it comes to claptrap, the Labour party has a monopoly. The new system that we have introduced this year for dealing with capital receipts is designed to ensure that they are recycled so that they can be used in the areas of greatest housing need. There is no particular reason why those areas should be the same ones as where the receipts arise.

Mr. Thurnham: Now that the Labour party has changed its policy in favour of the right to buy, will my hon. Friend, whom I very much welcome to the Dispatch Box, make it his first priority to ensure that more council houses are sold? Will he have a word with Bolton council —which, in 10 years, has succeeded in reducing its stock of houses only from some 26,000 to some 24,000?

Mr. Yeo: We know that hostility to the right to buy is never far below the surface in any Labour local authority. If my hon. Friend knows of any cases of difficulty in his constituency involving people being obstructed in their right to buy, I shall be happy to look into them.

Mr. Soley: In welcoming both new Housing Ministers to their posts, may I first remind them that the average life expectancy of a Housing Minister is only six months, so perhaps they should first negotiate a secure tenancy? Having done that, will they give some hope to the people of this country and recognise that since 1980, 1·5 million homes have been lost from the rented sector, half because of the right to buy and the other half because of the collapse in the private rented sector? Will the Minister now give people some hope by allowing local authorities to replace the homes that are sold, because a right to buy without a duty to replace equals cardboard city? That is the problem.

Mr. Yeo: I am grateful for the hon. Gentleman's welcome to me and my hon. Friend the Minister for Housing and Planning. I remind him that local authority lettings to new tenants, which are running at 228,000 in the latest year, are very close to the average for the past decade. There is no clear evidence that the effect of council house sales is to reduce the availability of accommodation to tenants. The fastest and the cheapest way for the hon. Gentleman to increase the supply of public sector housing would be to ensure that some of the 100,000 properties in local authority control which are currently empty are put back into use.
On the private rented sector, if the hon. Gentleman is really interested in helping us, he should stop most of his hon. Friends undermining that sector.

Charitable Housing Associations

Mr. Robert B. Jones: To ask the Secretary of State for the Environment whether he has any plans to improve the opportunities for home ownership enjoyed by the tenants of charitable housing associations.

Sir George Young: The Housing Corporation introduced in the summer the tenants' incentive scheme, under which registered housing associations, including charities, may give grants to help their tenants move out and buy homes of their own.

Mr. Jones: I am grateful to my hon. Friend for that reply and welcome him back to the Dispatch Box to answer what I believe is exactly the same question as I asked him that last time he was answering on this subject. Is he aware that the tenants' incentive scheme will not provide a single opportunity for tenants in my constituency to purchase their homes this year? Is that satisfactory? Would not it be much better to go back to basics and to give the right to buy to those tenants?

Sir George Young: My hon. Friend will remember that in a previous incarnation I tried to do exactly that. We tabled amendments to the Housing and Building Control Bill in 1983 to extend the right to buy to tenants of charitable housing associations, but were unable to persuade the other place to include those provisions in the Bill and the proposals were abandoned. In their place, we came up with the scheme for tenants of charitable housing associations. The Housing Corporation plans to spend over £40 million on grants, which gives it the potential to assist 2,500 tenants. I very much hope that some of my hon. Friend's constituents will be among those who succeed.

Mr. Frank Field: Will the Minister change the scheme so that tenants can opt into it? Currently, the scheme runs only if a housing association becomes part of the scheme. Is the Minister aware that the disadvantages of council house sales, which my colleagues identified in the previous question, do not apply to this scheme under which people are paid a certain sum to leave a tenancy and the tenancy can then be re-let to other people? Will he now change the nature of the scheme and allow tenants to opt in, rather than allow the housing associations to be the gamekeepers, who are preventing the scheme from working?

Sir George Young: I have no evidence that charitable housing associations are not willing to operate the scheme. it is a substantial benefit to them in that they get a re-let which they can let to someone on their list—something which they would not have done without the scheme. The housing associations are fully compensated for their management costs and there is no disadvantage to them in operating the scheme. I have no evidence that they are unhelpful in administering it.

Mr. Butterfill: Will my hon. Friend confirm that, when considering extensions to the right-to-buy scheme, he will not permit any new commonhold scheme to be extended to include leaseholders, on the basis that it would be no part


of any Government's remit to extend to one group of private citizens the right compulsorily to acquire the property of another?

Sir George Young: The Lord Chancellor recently issued a consultative document on commonhold and the Government are awaiting views on the proposals to introduce it. I shall make sure that my hon. Friend's suggestions are brought to my noble and learned Friend's attention.

Homelessness

Mr. O'Hara: To ask the Secretary of State for the Environment how many people are currently listed as being homeless.

Sir George Young: Accommodation was found for 37,460 households accepted as homeless by local authorities in England in the third quarter of this year.

Mr. O'Hara: Is the Minister aware that, under the Government, the number of homeless people has more than doubled and is well on the way to being trebled, that nearly 3 million people have suffered the tragedy of homelessness and that this can be attributed to factors that are directly influenced by the Government's policies, such as the decline in the number of units in the public and private sectors, the inadequate number of new builds for purchase in the private sector and a tragic increase in mortgage defaults which, at 120,000, have nearly quintupled under the Government and are accelerating?
Does the hon. Gentleman agree with the Roman Catholic Archbishop of Liverpool that the provision of adequate housing is not only a duty of Government but a moral imperative? Does he agree with the Catholic bishops' conference that the crisis of homelessness under the Government is not only a fact but a scandal?

Sir George Young: I have read the report produced yesterday by the Catholic bishops. They recognise that the problems of homelessness date from some time before the Conservative party came to Government. They pay tribute to a number of initiatives that the Government have introduced to tackle homelessness. Of course, they recognise, as I do, that more needs to be done.
As the hon. Gentleman probably knows, a £300 million initiative is under way to get people out of bed-and-breakfast accommodation. Some £96 million is being spent in London to deal with the problems of those sleeping rough. I suspect that the 3 million people to whom the hon. Gentleman referred are those who have been rehoused by local authorities. Most would never have been homeless but would have moved directly from where they were living, often in satisfactory conditions, straight into local authority accommodation. Although they score as homeless households, at no stage were the vast majority of them homeless.

Mr. Robert G. Hughes: Does my hon. Friend agree that one tragedy for the homeless is that there are more empty units of accommodation than there are people seeking homes? There are more than 10,000 empty council houses in five Labour London boroughs and there is much empty property in the private sector. Some empty property—not a great deal—is owned by the Government. Will my hon.

Friend look at this problem sector by sector so that we can bring these valuable units of accommodation back into use?

Sir George Young: My hon. Friend makes some constructive suggestions. The Audit Commission published a study showing that three quarters of authorities using bed-and-breakfast accommodation could end its use altogether simply by using better alternatives locally and by having better management of their housing stock. About 600,000 units in the private sector are empty and it would be helpful if there was a consensus on the recently introduced regime for assured tenancies so that private landlords had confidence that the rules would not be changed in the short term. The Treasury has issued fresh instructions to all Government Departments to reduce to a minimum the volume of empty stock. Much of that stock is owned by the Ministry of Defence and, when our troops return from the middle east, they may need the accommodation.

Mr. George Howarth: I, too, welcome the Minister to his new responsibilities. Has he had the opportunity today, and if not, will he take it, to read the front and inside pages of the Daily Mirror? The headline is,
Shame on the Tories' Doorstep
and refers precisely to our crisis of homelessness. Is the Minister aware of the growing body of concern among sources as diverse as the Prince of Wales, charities and local authority associations about our homelessness crisis, particularly at this time of year? Does he agree that the one simple, direct step that would eliminate the problem quickly and effectively would be to agree with local authorities that they can enter into private sector leasing agreements? That would take many thousands of people off the streets and resolve some of the problems that have been created by his Government.

Sir George Young: I am grateful to the hon. Gentleman for his warm welcome. In addition to recycling disused material, my Department is now recycling Ministers. The hon. Gentleman described the housing situation in emotive terms, but I draw his attention to the report by Professor Maclennan to Rowntree. It states:
Britain is a well housed country and it is misleading to suggest that there is a general housing crisis in Britain.
Consultation on private sector leasing ended on 3 December and I hope to announce my conclusions soon.

Mr. Jacques Arnold: Is not one of the causes of homelessness the tying-up of housing resources to the tune of £75 million in uncollected rents by five Labour London boroughs?

Sir George Young: If local authorities could collect more in rents, they would have more resources to apply to the maintenance and management of their estate and to bring back into use some of the properties that are unlettable.

Mr. O'Hara: On a point of order, Mr. Speaker. I asked a specific question——

Mr. Speaker: Order. I thought that the hon. Gentleman was going to ask leave to raise the matter on the Adjournment. Did he wish to do that?

Mr. O'Hara: Yes.

Local Government Finance

Mr. Terry Fields: To ask the Secretary of State for the Environment what is the progress of his latest review of the poll tax; and if he will make a statement.

Mr. Heseltine: I refer the hon. Gentleman to the answer that I gave earlier today.

Mr. Fields: During his review will the Secretary of State acknowledge the disgraceful circumstances in which the poorest members of society who cannot afford to pay the poll tax are daily facing the intimidation of the bosses' court and now gaol? Is not it ironic that a former Prime Minister, presumably as a reward for impoverishing the poor, should be given the Order of Merit and her husband a baronetcy?

Mr. Speaker: Order. I must remind the hon. Gentleman that we never discuss the honours list in the Chamber.

Mr. Fields: Is not it ironic that a former Prime Minister should be rewarded for impoverishing the poor while old-age pensioners are selling their war medals to prevent their receiving the draconian and immoral treatment of the courts? When will the Secretary of State live up to his leadership election pledge and scrap the poll tax?

Mr. Heseltine: The only irony is that the hon. Gentleman, who can well afford to pay the poll tax, is content to see the very poor people on behalf of whom he speaks forced to pay the bills that he will not pay.

Mr. Oppenheim: Does my right hon. Friend agree that, whatever changes to local government finance are made by whichever Government, they are still likely to have lo face

the fundamental problem of profligate, wasteful county councils, such as Derbyshire, which prefers to keep in with its National Union of Public Employees paymasters than to offer value for money and which recently rejected a low-cost tender because it was in the wrong-coloured envelope?

Mr. Heseltine: My hon. Friend is right to draw those matters to our attention and I wish that the problems were restricted only to county councils.

Mr. Blunkett: Does the Secretary of State agree that one of the most important measures that he could take in the short term to relieve the pain of the poll tax would be to increase central Government funding for local authorities next year? Given that on 10 May he called for a more realistic settlement based, as he said, on realistic economic assumptions, is he prepared to increase by 50 per cent. the settlement announced on 31 October, thus bringing it to the real level of inflation, and also to increase the revenue support grant element above the 1·9 per cent. announced on that date? Does he further agree that he should bring that forward immediately to allow people to understand that the Government are serious when they say that they are intent on doing something about the poll tax?

Mr. Heseltine: May I say how much I welcome the changed stance of the Labour party? A week ago the Opposition were saying that the only thing to do was to get rid of the poll tax at once, but now they are making suggestions on how we could modify its effect. In view of the hon. Gentleman's question, I cannot understand why he will not come and talk to me constructively about what we can do.

Points of Order

Mr. Nicholas Winterton: On a point of order, Mr. Speaker. I hesitate very much to raise this point of order, but I should like to know whether you have any difficulty in seeing people below the Gangway on the Conservative Benches. I know how many times I have caught your eye this parliamentary Session and I know how many times a number of hon. Members who have been called by you today have also caught your eye this Session. How do you actually judge whom you should call for supplementary questions? I have been in the Chamber from Prayers to this moment. Others whom you have called came in and moved out. I do not question your right to call whom you wish, but, on behalf of all hon. Members, I seek justice in the calling of hon. Members to ask supplementary questions.

Mr. Speaker: The hon. Gentleman is a distinguished member of the Chairmen's Panel. If an hon. Member in one of his Committees misbehaved in any way, would he call him?

Mr. Winterton: I have not misbehaved—[Interruption.] I am grateful for your reference to my service on the Chairmen's Panel which I consider a great and serious responsibility. I hope that in this place I have always acceded to the requests and the authority of the Chair. At no time has anyone said that I have misbehaved in this place. If I have, I apologise, but I expect justice from the Chair.

Mr. Speaker: I accept the hon. Gentleman's apology.

Mr. Max Madden: On a point of order, Mr. Speaker. Like many hon. Members. I have considerable sympathy with the difficulty in which you have been placed by the efforts of the Secretary of State for the Environment to rig Question Time to stifle discussion on the poll tax, a matter which the Government find most embarrassing. To avoid your being placed in unacceptable difficulty in future, may I suggest that you have a quiet word in the Prime Minister's ear and suggest that at the next Cabinet meeting he makes it clear to his colleagues that any attempt to rig Question Time by linking large numbers of questions together is unacceptable to you and to Back Benchers on both sides of the House?

Mr. Speaker: It is not my function to have a quiet word in anybody's ear. [Interruption.] It was a rather large number of questions to link today. Such matters are frequently best sorted out through the usual channels.

Mr. Dave Nellist: Further to that point of order, Mr. Speaker.

Mr. Speaker: The hon. Member is raising a point of order. He has already asked a long question. Hon. Members will debate the Opposition's motion today. This takes time out of it.

Mr. Nellist: I am grateful that at least the Secretary of State changed the practice that was prevalent a few days ago and actually notified hon. Members that he intended to make a linkage. You, Mr. Speaker, will recognise that 16 questions were reached today, eight of which were on the poll tax, and on which seven supplementaries were

asked. The other eight—half of them were reached—raised 19 supplementaries. Could you consider whether advice should be given to Ministries that, by such a linkage, they skew the distribution of supplementaries so that a false picture is given of the importance that hon. Members attach to a subject? What is the point of hon. Members putting questions on matters relating to the poll tax if, by that linkage, the Secretary of State can halve or reduce to one third the amount of time that the House spends on the subject?

Mr. Andrew MacKay: Further to that point of order, Mr. Speaker. Is not it right to point out that the reason why so many questions were linked is that so many questions were packed on the Order Paper the previous day? Is not it also worth pointing out that the best part of half an hour was devoted to answering questions on the community charge? Surely that was quite long enough.

Several Hon. Members: rose——

Mr. Speaker: Order. Allow me to deal with these matters. I cannot accept that there is packing on the Order Paper. In this Session we have the new arrangement of the shuffle and only the first 40 questions are printed on the Order. Paper. A few months ago, more than 100 were printed, so it is a matter of luck. I repeat that the best way to sort out the matter is through the usual channels. Linking is not my responsibility.

Mrs. Margaret Ewing: On a different but very serious point of order of which I have given you prior notice, Mr. Speaker. I wonder whether you could advise the House whether any approaches have been made to your office about the possibility of a statement regarding the loss earlier today of the fishing vessel Premier and its six crewmen, all of whom were from my constituency and three of whom were from the one family. You will appreciate the grief that now engulfs the communities of Lossiemouth, Hopeman and Burghead in my constitu-ency, as will all hon. Members who represent fishing constituencies. I therefore think that the matter requires an early statement to the House about the facts of the case so that the families know exactly what happened.

Mr. Alick Buchanan-Smith: Further to that point of order, Mr. Speaker. Am I correct in recalling that similar tragic circumstances in the past have led to a private notice question being allowed? Am I also correct in saying that the House traditionally has shown particular concern about and interest in those who occupy themselves in dangerous activities such as fishing and that, therefore, the House likes to have the opportunity to let its feelings be known on such a tragic occasion as this?

Dr. Norman A. Godman: Further to that point of order, Mr. Speaker. In just two tragic incidents in three weeks, Scotland has lost more fishermen than we lost in the whole of last year. The House should demonstrate its sympathy for the families concerned. In that regard, it should also be in a position to ask questions of the appropriate Minister. I therefore ask that a statement be made by the relevant Minister some time this evening.

Mr. Alex Salmond: Further to that point of order, Mr. Speaker.

Mr. Speaker: Order. I think that we have had enough.

Mr. Salmond: Very briefly.

Mr. Speaker: If I call the hon. Member today, I may not be able to call him tomorrow.

Mr. Salmond: Very briefly.

Mr. Speaker: Mr. Salmond.

Mr. Salmond: May I say, briefly, that Members from all constituencies that represent the fishing industry would have liked a private notice question to be discussed today?

Mr. Speaker: We do not discuss my discretion on private notice questions in the Chamber. I remind the House that there is a debate on fisheries tomorrow when that matter can be explored and, during the debate, perhaps the Minister responsible will be able to give us——

Several Hon. Members: On a point of order, Mr. Speaker.

Mr. Speaker: Sit down, please. The Minister may be able to give a response to that tragic accident with which I know that the whole House has sympathy.

Mr. Dick Douglas: Further to that point of order, Mr. Speaker.

Mr. Speaker: No, I am not calling any more members of the Scottish Nationalist party.

Mr. Douglas: Why not?

Mr. Speaker: Because it is an abuse. Sit down, please.

Mr. Brian Wilson: Further to the point of order, Mr. Speaker. The comments you have made about the debate on fisheries tomorrow night are sensible. If the tragic events of today are referred to, however, would it be possible to separate that matter from the general debate so that a brief statement could be made on it at the outset?

Mr. Speaker: I am sure that that request has been heard by those on the Front Bench.

BILLS PRESENTED

DEAF PERSONS (ACCESS TO FURTHER AND HIGHER EDUCATION AND TRAINING)

Mr. Malcolm Bruce, supported by Mr. Alistair Burt, Mr. John Hannam, Miss Emma Nicholson, Mr. Ieuan

Wyn Jones, Mrs. Margaret Ewing, Mr. Jack Ashley, Mr. Lawrence Cunliffe, Mr. Alfred Morris, Mrs. Rosie Barnes, Rev. Martin Smyth and Mr. Matthew Taylor, presented a Bill to provide for the establishment of an Education and Training Council for deaf people; to secure preparation for, and access to, further and higher education and training for deaf persons; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 18 January and to be printed. [Bill 43.]

BRITISH RACING COMMISSION

Mr. Alan Meale presented a Bill to establish a single national commission of control for the whole of the horse and dog racing industries, with overall responsibility for the bloodstock, thoroughbred breeding and betting industries, incorporating the control of the financial arrangements, rules and aims of current bodies, their other responsibilities and, where applicable, the assets of all publicly supported organisations concerned or connected with these sports: And the same was read the First time; and ordered to be read a Second time upon Friday 18 January and to be printed. [Bill 44.]

FOOTBALL SPECTATORS

Mr. Alan Meale presented a Bill to establish a statutory liaison body for the sport of football, to include in its membership the various footballing authorities and their agencies, Football League clubs, the Sports Council, football supporters' organisations and other necessary bodies; to make provision for changes in the organisation and function of the sport; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 1 February and to be printed. [Bill 45.]

GREYHOUND BETTING LEVY

Mr. Alan Meale presented a Bill to extend the function of the Horserace Betting Levy Board to include the sport of greyhound racing; and to make consequential amendments to the Betting, Gaming and Lotteries Act 1963: And the same was read the First time; and ordered to be read a Second time upon Friday 25 January and to be printed. [Bill 46.]

EUROPEAN COMMUNITY DOCUMENTS

Ordered,
That European Community Document No. 9898/90 relating to guide prices for fishery products for 1991 shall not stand referred to European Standing Committee A.—[Mr. Boswell.]

Opposition Day

[2ND ALLOTTED DAY]

The Economy

Mr. Speaker: I must announce to the House that I have selected the amendment in the name of the Prime Minister. 
I do not think I would be wholly justified in putting a limit on speeches today, but if all the hon. Members who are called could limit their speeches to about 15 minutes, every hon. Member who wants to participate will be called.

Mr. John Smith: I beg to move,
That this House deplores Government policies which have caused the deepening economic recession, resulting in rising unemployment and increasing numbers of business failures; regrets the fall in investment in the manufacturing sector and the continuing neglect of education and training which undermine Britain's preparations for the Single Market after 1992; and calls upon the Government to lower the crippling level of interest rates, to reverse the cuts in public investment in training and support for industry, and to promote the modernisation of British industry through the application of new technologies, the adoption of a sustained programme of regional industrial development, and a long-term commit-ment to a major increase in the provision of education and training.
The Prime Minister, when he was Chancellor of the Exchequer, sought more than once to deny that the British economy was in recession. That was no doubt because he remembered the prediction he had made almost precisely a year ago, on 6 December 1989, to the Association of British Chambers of Commerce, when he said:
I do not myself think that a recession is either likely or necessary.
Not for the first time, a Government prediction about the course of the economy has been found to be plainly wrong.
A serious recession is spreading throughout our economy, bringing in its wake business failures and rising unemployment. Businesses that borrowed at much lower rates of interest are finding it impossible to meet obligations at the present crippling high rates and they are having to give up. Companies large and small are experiencing a downturn in activity, a fall of sales and a loss in profit. Regrettably, they are cutting back on investment, training, and research and development.
Unemployment has now risen for seven consecutive months, with a rise of 32,200 in October. Last month, the official figure given by the Government for unemployment was 1·703 million. That figure was seasonally adjusted and it represents 6 per cent. of the work force.
We all know about the 30 changes that have been made to the way in which unemployment statistics have been calculated since 1979. If we apply the new basis of assessment—the Government's own basis—to 1979, unemployment then would have been 1·075 million, or 4 per cent. of the work force. Let there be no argument—unemployment has increased significantly in the 11 years for which the Government seek congratulation in their amendment to the motion. We await with some trepidation the unemployment figures to be announced tomorrow, as we view with foreboding the likely outcome for the whole of 1991.
Like other right hon. and hon. Members representing industrial constituencies, I have noticed the ominous signs

in my area, as more and more redundancies are announced. The difference, as many have noticed, between the present recession and that of the early 1980s, which did so much to damage our industrial capacity, is that this one started in the south-east and has spread from there to other parts of the nation. Conservative Members often used to think that the earlier recession affected only constituencies represented by Labour Members. Now I hope that they understand clearly that the present downturn affects all parts of our country.
What do the Government say about all this? We know that the Prime Minister was very coy about conceding the reality of recession. In the autumn statement forecast that he brought to this House, recession was not mentioned, even if an examination of the statistics showed a fall in gross domestic product for four successive quarters. More recently, the new Chancellor of the Exchequer has been forced to recognise reality a little more. I understand that he said in evidence to the Select Committee on the Treasury and Civil Service:
Business is pretty rough for people at the moment.
He went on to claim that the recession would be "shallow and short-lived." The right hon. Gentleman may become closely associated with those words—[Interruption.] I am not making a personal remark about him. If I did make one, it would be that he was short and short-lived. I am not in the business of name calling. I am about to suggest that "shallow and short-lived" is a far better description of Government economic forecasts than it is of the course of the economy.
Why on earth should we believe those who denied the possibility of a recession a year ago, when they tell us that it will be shallow and short-lived now? Why should we believe them when, at the beginning of the decade, they so grievously underestimated the extent of a recession that wiped out 20 per cent. of British manufacturing industry?
The Government have two distinct characteristics. No set of Ministers has ever been so free with bland assurances that all was well; and no set of Ministers has ever made so many wholly false predictions about the future of the economy. In 1988, the Treasury was notoriously wrong by 288 per cent. about the balance of payments. Inflation, that "temporary blip"—a good example of the bland and easy assurance—went on blipping and blipping to its present high level. The 1988 inflation prediction was 62 per cent. wrong. Last year, it was 40 per cent. wrong and this year's autumn statement forecast was 100 per cent. wrong compared with that of exactly a year before.
We remember the former Prime Minister's reaction when a monthly balance of payments deficit appeared for the first time at more than £1 billion. It was, she said, "a freak". As we know, it has become a depressing feature of almost every month since then.

The Chancellor of the Exchequer (Mr. Norman Lamont): How often was the forecast right for the public sector borrowing requirement under the right hon. Member for Leeds, East (Mr. Healey)?

Mr. Smith: I am sure that those forecasts were more accurate than the Government's The right hon. Gentleman appears to be saying that the Labour Government were consistently 288 per cent. wrong—a bold claim to have to substantiate. I am anxious that the right hon. Gentleman should answer some of my charges. If there is anything wrong with any of my criticisms of


Government economic forecasts, he can spring to his feet and tell me so. But he cannot. He knows that I am telling him simple facts.
Is not it deplorable that we have a Government who display a total incapacity to make even elementary correct predictions about the future of the economy? The new Chancellor has adopted the same techniques as his predecessor. I am sure that the phrase "shallow and short-lived" will take its place in the litany of complacent assurances—the world of blips, freaks and economic miracles—with which the Government are associated.
I suspect that the new Chancellor may seek to distance himself, especially as the recession deepens, from past boasts about economic miracles. Like the new Prime Minister, he has been closely involved in the Government's economic policy all along, and has been willing to go along with the absurd hypes that have accompanied the inaccurate predictions. In the public expenditure debate in 1988, he spoke about a
complete and dramatic … transformation of our economy".—[Official Report, 24 February 1988; Vol. 128, c. 382.]
Even in January this year, when there was more evidence to the contrary, the right hon. Gentleman was peddling the same nonsense. In the debate on the autumn statement on 23 January he again claimed that the economy had transformed itself and was doing better than ever. If the economy was doing better than ever in January, what on earth are we doing with a recession in December?

Mr. Phillip Oppenheim: Is the right hon. and learned Gentleman aware that the Opposition's arts spokesman made a pledge at the Edinburgh festival to give free television licences to all pensioners? Is he prepared to confirm or deny that pledge?

Mr. Smith: I cannot congratulate the hon. Gentleman on his sense of relevance, because we are discussing unemployment and recession. However, he totally misrepresents my hon. Friend. [HON. MEMBERS: "Answer."] If I wasted my time seeking to correct the misapprehensions of Conservative Members, the debate would get nowhere. [Interruption.] It is plain that Conservative Members do not like to be told the facts about their mishandling of the economy. They do not like to be told about unemployment, recession and their own inaccurate forecasts. It is the duty of the Opposition to remind them of their incompetence, because we were sent to the House to represent people who are suffering as a result of their policies.

Mr. Julian Brazier: The right hon. and learned Gentleman stresses unemployment. How many countries in the Economic Community have a lower rate of unemployment than the United Kingdom as measured by the independent labour force survey?

Mr. Smith: As the hon. Gentleman knows, one of the great difficulties in Britain is the bogus system used for assessing unemployment. To my knowledge, no other country in the EC or even the OECD calculates part-time jobs as full-time employment. When Conservatives abandon the practice of misusing every statistic that comes to their hands, we will be prepared to take statistical comparisons from them.
I shall return to the subject of the debate, which is the recession, a topic that Conservative Members want to avoid. If we cannot accept the Government's figures, let us look elsewhere for a more realistic appreciation of Britain's economic situation. The latest CBI forecast for the economy shows a decline of 1 per cent. in GDP next year and a drop of more than 6 per cent. in investment. That forecast is in line with the latest business survey, which has often been quoted with approval by Conservative Members. That assessment does not show that the difficulties ahead will be either shallow or short-lived. All the evidence points to the risk of a recession more serious and more prolonged than the Government are ever prepared to admit. Many economists admit that predicting the future course of the economy is not always easy and that changing the direction of the economy has its difficulties.

Dame Elaine Kellett-Bowman: The right hon. and learned Gentleman should ask his right hon. Friend the Member for Leeds, East (Mr. Healey).

Mr. Smith: The hon. Lady should listen.
It has been pointed out that it takes time to alter course, and that a modern economy is as difficult to manoeuvre as a large oil tanker. Such an analogy may have been lurking in the mind of the Prime Minister and former Chancellor when he gave an interview to the Financial Times on 27 October. He told Peter Norman:
It will take some time, it always does, to change the economy. It's like turning the Titanic round, as you know.
There must have been some subliminal force at work, or perhaps there was an internal and unpublished Treasury forecast, disordering the right hon. Gentleman's pattern of thought. The fact was that the Titanic did not turn round —if it had, it would not have collided with the iceberg. I shudder to think in what direction our economy would move if we were to adopt, as apparently the Government are, the navigational principles practised by those in charge of the Titanic. Such revealing analogies fail to provide a sense of confidence that the Government, their head or their members, have much of a clue about steering the economy in any direction.
The unavoidable truth is that we are in our present difficulties with a massive balance of payments deficit, the highest levels of inflation and of interest rates among the leading industrial nations, and with high and rising unemployment because of major errors by the Government in the handling of our economic affairs. What is happening now, in an interesting development, is that responsibility is becoming much more clear as our problems increase.
Let us take the balance of payments deficit. We were told in earlier years that we should not concern ourselves about the deficit in the current account because it was a problem of success. It was principally the result of an investment boom and the consequence of excessive demand. We were assured that it would correct itself as demand subsided. Now demand has emphatically subsided, but, I regret to say, investment is in substantial decline, while the balance of payments has not corrected itself. Despite the recession and despite what lies ahead of us, the autumn statement forecast a deficit of £l1 billion next year.
The only conclusion that can be reached on the basis of that evidence is that, once again, the Government's assurances flowed from flawed analysis. The balance of


payments deficit in the United Kingdom is a structural problem, arising to a large extent from neglect of the manufacturing sector. The most dramatic evidence of that neglect is that investment in manufacturing, which plummeted in the recession of the early 1980s, only caught up with 1979 levels in 1988, and is once again in sharp decline. I despair of the Government's ever understanding that manufacturing industry is the basic wealth creator for this nation. It is the crucial international tradeable part of our economy. A cursory examination of the success of Germany and Japan shows the consistent priority that these more successful economies have given to manufacturing. They declined to indulge in the fantasy that we had moved into a post-manufacturing world.

Mr. Jonathan Sayeed: If the Labour party is so expert on manufacturing industry, why did manufacturing output decline so substantially between 1974 and 1979, when the Labour party was in power?

Mr. Smith: Our record stands in good comparison with that of the Government. I am happy with every aspect of our economic performance, particularly in industry, and including our share of world trade in that period. I hope that the hon. Member will recognise, when he makes these comparisons, the important effect of North sea oil on our balance of payments. As we have constantly pointed out, it generated huge amounts of public revenues and, more importantly, the balance of payments was covered by North sea oil for many years. Only when it declined in value was the failure of the manufacturing sector revealed. Let me remind Conservative Members that it was only under this Conservative Government that we went into deficit.

Mr. Patrick Nicholls: Will the right hon. and learned Gentleman give way?

Mr. Smith: I can hardly give way to the hon. Gentleman when I am answering the question put to me by his hon. Friend the Member for Bristol, East (Mr. Sayeed).
What the hon. Gentleman does not understand—he is probably reluctant to face it—is the simple fact that we only went into deficit in the balance of trade in manufactured goods during this Government's lifetime. This Government have a bad record compared not only with that of previous Labour Governments but with that of every other Government who have handled these matters.

Mr. Nicholls: Will the right hon. and learned Gentleman give way?

Mr. Smith: No.
I despair of the Conservative party's ever realising the importance of manufacturing industry for our economy. Our economy will not be put on sound foundations—it will not become as productive and competitive as it needs to be—if that simple lesson is not learnt.

Mr. Richard Holt: Will the right hon. and learned Gentleman give way?

Mr. Smith: I am not giving way to the hon. Gentleman. I have given way frequently, and I must proceed with my speech.

Mr. Holt: Will the right hon. and learned Gentleman give way?

Mr. Smith: No.
Manufacturing industry needs sustained investment. That is why cripplingly high interest rates, well above those of our competitors, are such a deadly threat to our future.

Mr. Holt: Will the right hon. and learned Gentleman give way.?

Mr. Smith: I have told the hon. Gentleman that I do not propose to give way to him. If he continues to rise——

Mr. Holt: rose——

Mr. Smith: Certainly not. Let me make it absolutely clear to the hon. Gentleman that I do not intend to give way to him.

Mr. Holt: I shall remember that.

Mr. Smith: I hope that the hon. Gentleman will.

Mr. Holt: The right hon. and learned Gentleman will regret that.

Mr. Smith: I shall not complain about what the hon. Gentleman has said, Mr. Deputy Speaker, because, like most hon. Members, I take him seriously on almost nothing.
We shall face the single market after 1992 with poor levels of investment and, just as bad, with wholly inadequate provision for education and training and a major problem in research and development capacity. Let us compare the levels of Government funding for research and development in the United Kingdom and in Germany. In 1988, the last year for which figures are available, the Cabinet Office annual review of research and development revealed that Germany—then West Germany—spent 66 per cent. more on industrial research and development than the United Kingdom and 109 per cent. more on pure science. What is the result of that disparity of effort and priority?
One highly significant measure of success is the number of patents that are taken out. Between the mid-1970s and the mid-1980s, the number of patents taken out in the United Kingdom fell by 15 per cent. In Germany, there was an increase of 18 per cent. in the same period and in Japan—ominously—there was a massive 102 per cent. increase. If that process continues, the United Kingdom will not be able to maintain a world-class presence in the front line of innovation and technological development. That will have consequences for our industry and our economy that are almost too painful to contemplate.
Industrial training in this country is simply a national disaster. Survey after survey shows that we trail badly behind our competitors and that even in recession, skill shortages frustrate our economic potential. Despite the overwhelming evidence, the Government refuse to recognise that national problem and persist in cutting the training budget. Incredibly, the Department of Employment has cut expenditure on its training and education programmes every year since 1987–88 and plans to continue to cut its budgets as far into the future as 1992–93. Next year alone—a year of recession—it is to cut its budget by £300 million, or 10 per cent. It passes comprehension that such folly can be perpetrated.
In industry, as the recession deepens——

Mr. Tony Favell (Stockport): Will the right hon. and learned Gentleman give way?

Mr. Smith: No. I have given way frequently.
Training budgets will come under pressure as the recession deepens and training carried out by existing companies will be cut in too many instances. The Independent's labour correspondent gave an alarming account last Friday, 7 December;
The first sign that the recession is having a considerable impact on the provision of training in the manufacturing industry emerged yesterday. In some areas of the North expenditure on training has dropped by 20 per cent., and even firms in the M4 high-tech corridor are cutting back, according to evidence supplied by the Engineering Industry Training Board.

Mr. Nicholls: rose——

Mr. Smith: No.

Mr. Nicholls: rose——

Mr. Deputy Speaker (Sir Paul Dean): Order. The right hon. and learned Member for Monklands, East (Mr. Smith) has made it quite clear that he does not intend to give way.

Mr. Smith: Not only will I not give way, but I will not be deflected by the organised tactics of Conservative Members.

Mr. Nicholls: Give way.

Mr. Smith: The fact that the hon. Gentleman rises repeatedly shows that he has only one purpose, and that is to disrupt my speech.

Mr. Nicholls: rose——

Mr. Smith: The hon. Gentleman is doing it again. It would be for his good and that of his hon. Friends to hear what the engineering industry training board says about what is happening to training in industry. That is relevant, because the Government are winding up that board and replacing it with a wholly voluntary body. The article continued:
Pennant Jones, secretary of the board, said that it was 'a crime' that in areas of chronic skill shortages traineeships were being cut.
If anything, that is an underestimate of the training problem in this country. As with research and development, so with industrial training—we are heading downhill.
With the evidence of the recession so clearly before us, and with some of the major deficiencies in our economy so painfully apparent, the Government must change the course of economic policy if the country is to avoid a deep and damaging recession. Interest rates need to be cut to bring relief to our hard-pressed industrial companies—as well as, of course, to the long-suffering and hard-pressed home owners. In contrast with the chronic Conservative habit of promoting unsustainable booms, followed by deeply damaging slumps—as in the Maudling push for growth, the Barber boom and the Lawson "spend now, pay later" credit spree—we need macroeconomic policies that will promote steady and sustainable growth.
For an economy with the structural weakness from which our economy regrettably suffers, we need a positive strategy for industrial recovery and investment. We need a Government who are keen to work in partnership with industry and with others to rebuild our technological base,

to revive our neglected regional economies and, above all, to create the world-class work force without which we have no chance of success.

Sir Hal Miller: I have been carefully following the right hon. and learned Gentleman's remarks about investment, the balance of trade, training and employment, and also his continued emphasis on recession. Representing an industrial seat as I do, and having some knowledge of the motor industry, I must tell him that I simply do not recognise the picture that he is painting. Does he recognise the sustained and continuing investment taking place even now in our motor manufacturing industry? Does he recognise the investment in that industry from Japan, Germany, America, France and every other country that knows that Britain is the logical place to manufacture—[Interruption.] Does he recognise that our balance of payments deficit is being remedied by the motor industry—[Interruption.] Does he recognise—[Interruption.] Training and enterprise coun-cils are what the customer wants and what the boards want.

Mr. Smith: The hon. Gentleman illustrates one of the difficulties of giving way too frequently. If everyone intervened at such length, no speeches would ever be finished. I heard only part of what he said, but he appeared to deny, on the basis of his experience, that there was a recession. I fully welcome any investment in the motor industry, but I am sure that the hon. Gentleman will agree that many people in that industry are severely disturbed at the effects of the recession on their sales. The hon. Gentleman cannot pontificate on the basis that he uniquely represents an industrial area. I represent an industrial area. Many of my right hon. and hon. Friends represent industrial areas. They can see what is happening —redundancy after redundancy, job loss after job loss—as the recession deepens. I am sure that many of the private sector businesses that are toiling under the results of the present economic policy tell the hon. Gentleman that privately, only he does not pass on those confidences to us in public in the House of Commons.
We started this Conservative decade with a major recession and we end it in similar difficulties. The blip, the freak, the painfully short-lived episode was the unsustainable boom in between. It is a pattern which simply must not be repeated in the 1990s.
Despite the changes in the Government's personnel, there is no sign that they have learnt from the errors of the past decade, or even comprehend the perils for the United Kingdom if we do not make a breakthrough to a competitive and productive economy. Rather than the Government's constantly seeking to maintain the illusion of success in the 1980s, they should confront the reality of modern Europe, which is that, in economic terms, Germany has raced well ahead, France is significantly in front and we are now being overtaken by Italy.
That reality is increasingly understood by our people. It needs urgently to be comprehended by their Government, but I fear that there is no sign that there will be any alteration in the policies which have inexorably led us once again into recession, for which, with all its painful consequences, we will hold the Government responsible.

The Chancellor of the Exchequer (Mr. Norman Lamont): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
congratulates Her Majesty's Government on the improve-ment in economic performance over the last 11 years and on its maintenance of tight monetary and fiscal policies necessary to reduce inflation which have been reinforced by membership to the ERM; and notes that inflationary pressures are now easing as a prelude to falling inflation and the resumption of sustainable growth.".
Over the years, I have enjoyed many of the speeches of the right hon. and learned Member for Monklands, East (Mr. Smith). He has banked up an unparalleled depth of experience as an Opposition spokesman—a post for which he remains eminently qualified.
Having listened to the right hon. and learned Gentleman's speech, I felt that there was something else to come. I was rather surprised that he sat down when he did. I thought that he was just about to get to the point when, perhaps for the first time, he might get over the coyness and shyness that seem to come over him.
I have had the pleasure of being a Treasury Minister for some years and listening to the right hon. and learned Gentleman, but in all those years there has not been one occasion when the right hon. and learned Gentleman has ever made it clear to the House what are his policies to tackle inflation. I do not understand what his policy is, and the truth is, neither does he.
The right hon. and learned Gentleman's speeches are always enjoyable, but they always remind me of what was once said about the speeches of a candidate for the American presidency which were described as being like a Chinese meal—delicious with a bit of contrast here and a bit of spice and ginger there, but at the end of the clay one does not know whether one has eaten anything at all.
The fact is that Britain's central problem remains the control of inflation. Sometimes the right hon. and learned Gentleman makes out that he, too, is concerned about inflation. At other times, as in an interview in The Daily Telegraph recently, he says that inflation is just one of many problems to be considered. In recent months, he has been telling us that inflation is the top priority. But now the right hon. and learned Gentleman cannot wait to change the subject and talk about recession. That shows how much stomach he has for the fight against inflation.
The contrast with the Government's position could not be more clear. We are clear about the prime task, which, overwhelmingly, is the defeat of inflation. That is why interest rates have had to be so high and why we have joined the exchange rate mechanism.
In the past 10 years, we have had some success. Inflation has been, on average, just under 8 per cent. Inflation tends to go in cycles and it is instructive to compare this cycle with previous ones. The current peak is likely to be less than half that of the 1970s; but our record is not yet good enough and inflation is once again too high.
I noticed that the right hon. and learned Member for Monklands, East did not for a minute volunteer to tell us why he thought that inflation had increased—and we all know why he did not. It is clear that, in 1987, the United Kingdom's monetary policy was not tight enough. Most other countries made the same mistake, but the effects were more serious for us in Britain, because we had already been enjoying strong growth for several years and were nearer to full capacity. For that reason, the impact on our

inflation rate was greater, although since 1987 there has been a general increase in inflation throughout the developed world. On average, inflation in EC countries has almost doubled and in Germany it has more than doubled, although it is still running at a very low rate.
Our response to that increased inflation was straightforward and clear. In 1988 and 1989, my right hon. Friend the Member for Blaby (Mr. Lawson) raised interest rates. As he himself said, it was time to introduce more restrictive measures, and that was done. My right hon. Friend the Prime Minister continued that tight policy when he was Chancellor, but he also made the historic decision to join the ERM.
That marked a decisive change in the Government's counter-inflationary strategy. No decisions could have been discussed more exhaustively in advance: all the angles were considered. We knew that we were then joining the tough division of the European league. We have always know that the discipline imposed on us would be considerable. My right hon. Friend the Prime Minister said so repeatedly and so have I. I have made it clear beyond question that we have entered this new commitment knowingly and we shall do whatever is necessary to maintain our position in the ERM.
In spite of that, however, and despite the welcome given to the decision, some people—including the right hon. and learned Member for Monklands, East—have not woken up and recognised that the rules have changed. If they do not listen to our words, they will learn from our actions. There can be no question of a reduction in interest rates that is not fully justified by our position in the ERM. That will be the case however strong is the pressure for lower interest rates based on other indicators. The discipline of the ERM is tough, but, because it increases the certainty of lower inflation, it also means that when interest rate reductions do take place, they are securely based.

Mr. Giles Radice: The right hon. Gentleman told the Treasury Select Committee that business was rough. Is not his problem, however, the fact that within the ERM sterling is now very weak and he is therefore not able to reduce interest rates—which is precisely what he ought to be doing if he is to ease the recession?

Mr. Lamont: I have just made it crystal clear that our overriding priority is to maintain our position in the ERM. That is part of our counter-inflationary policy. Presumably when Opposition Members urged us to join the ERM, they, too, appreciated the obligations that it would place on us.
Our tight monetary policy will be supported by a tight fiscal policy. We have established an enviable record of debt repayment by keeping a tight grip on public spending, and, with ex-Chief Secretaries at both No. 10 and No. 11, I can assure the House that we will not relax that grip now.
Inevitably, we hear siren voices suggesting that the exchange rate is too high. Unfortunately, that seems to be a fundamental part of the British psyche, especially in the Labour party: whatever the exchange rate, it is always too high. Devaluation, however, is merely self-defeating. Far from producing the continued stimulus to output that they desire, countries that adopt that course usually end up with only one result—increased inflation. We turned our back on that sort of thinking when we joined the ERM; we accepted the discipline and will act accordingly.
I have heard it said that we are already looking for a covert reduction in the exchange rate by moving to narrower margins at a lower central rate. That is not the case. There is no question of an early move to narrow margins and certainly no intention of seeking this or any other device to escape from the exchange rate discipline.

Mr. A. J. Beith (Berwick-upon-Tweed): Even with high interest rates and membership of the exchange rate mechanism, the Chancellor cannot hope for underlying inflation of below 5·5 per cent. by the middle of next year. Surely he cannot be satisfied with that. Does not it mean that he must look to further measures, such as the narrow band and some of the measures taken by our competitors, if he is ever to tackle inflation properly?

Mr. Lamont: I have just made it clear that I do not anticipate moving to the narrow band in the very near future. We have given our forecast for inflation. I shall say a word about that. We have published that forecast and it is a little less ambitious than what the hon. Gentleman said.

Mr. Neil Kinnock: The Chancellor of the Exchequer puts emphasis on the discipline of the exchange rate mechanism. That is widely understood, of course. Is he aware that he has acknowledged that his Government have got the economy into such a state that they cannot afford to risk any movement of the pound downward, even within the exchange rate mechanism and even at the cost of plunging our economy, with its high burden of interest rates, deeper into recession?

Mr. Lamont: Not surprisingly, the right hon. Gentleman illustrates only too clearly that he does not understand one word about the exchange rate mechanism. He says that he accepts the discipline of the ERM, but at the same time he seeks to find a way out of the discipline that he himself urges upon us.—[interruption.] If the right hon. Gentleman understood the exchange rate mechanism, he would realise that I had answered his question.
The fact is that the central rate of DM2·95 strikes the right balance between the need to maintain a firm anchor against inflation and the importance of preserving the competitiveness of British goods in world markets. Above all, the rate at which we joined was the rate in the market not only on the date of entry but for some time before. Indeed, it was very close to the average real rate over the last 10 years.
I would add just two further points. We have heard a great deal recently—sometimes we hear it from the right hon. and learned Member for Monklands, East—about the need to close the inflation gap with Europe. It is an aim which I share. We have made considerable progress—better progress than the Opposition give us credit for—in achieving that aim. However, adherence to the discipline of the exchange rate mechanism is the best way to guarantee that we shall narrow our inflation gap with Europe.
I also hear arguments—not least from some of my hon. Friends—about the potential benefits that could come from an independent central bank or an independent monetary policy. Whatever the pros and cons of that argument, it has to be recognised that we have already in some measure achieved the benefits of that by joining an

anti-inflationary club that has a track record, credibility and clear rules. It is important that we should stick to the rules.
It always takes time for the effects of tightening policy to show through in the inflation figures. On this occasion the delay has been particularly long. However, headline inflation has now almost certainly peaked. The Treasury's forecast that it will fall to 5½ per cent. by the fourth quarter of 1991 is by no means optimistic, compared with the majority of outside forecasts. The majority of outside forecasts are for both lower inflation than we are forecasting and for higher growth than we are forecasting. There can, therefore, be no accusation that the Government take a rosy and optimistic view of the future.
The right hon. and learned Member for Monklands, East made great play of the fact that the Government's forecasts have not always been right. He described these things as "elementary", as if he could write them down on the back of an envelope and tell us what inflation and the balance of payments would be next year. The House will recall that I intervened to ask him how often the forecasts of the public sector borrowing requirement had been proved correct when his right hon. Friend the Member for Leeds, East (Mr. Healey) was Chancellor of the Exchequer. Perhaps the right hon. and learned Gentleman has not had the pleasure, as I have, of being given for Christmas the memoirs of the right hon. Member for Leeds, East. There is a long passage complaining about the inadequacy of the forecasts that he was given and about how they were never right, including those on the PSBR. The right hon. and learned Gentleman may remember that his right hon. Friend said about economic forecasts:
Like long-term weather forecasts they are better than nothing. But their origin lies in the extrapolation from a partially known past, through an unknown present, to an unknowable future".
Forecasting is an uncertain business, but there is every reason to be confident that our forecasts on inflation can be fulfilled. Why do I say that? First, all the monetary indicators point to a slowdown. Both broad and narrow monetary growth have decelerated rapidly in response to high interest rates. The narrow definition of money is within its target range, having fallen every month since April. Bank lending has moderated dramatically. Secondly, it is clear from the real economy that inflationary pressures have eased substantially. The housing market, retail sales and a whole range of other indicators show that demand is tight and the economy is slowing.
The Labour party has never understood either the ERM or the need to conquer inflation. It has never wanted to understand. For Opposition Members, the ERM was two things. It was a soft option; and it was a cloak. No need to work hard to produce an economic policy—just parrot "ERM" on every occasion. How will we stimulate economic growth? "Join the ERM", was Labour's answer. How will we maintain confidence? "Join the ERM." How will we increase productivity? "Join the ERM." How will the Labour party avoid having to spell out any policies? Just keep parroting, "Join the ERM". The truth is that when we joined the ERM, at a stroke we completely removed Labour's economic policy. The truth is that now that Britain has joined the ERM the Labour party stands revealed as having no anti-inflationary policy and no economic policy of any kind.

Mr. John Smith: Before the right hon. Gentleman leaves the question of inflation, as he was in the Treasury when the former Chancellor, the right hon. Member for Blaby (Mr. Lawson), made a prediction, can the right hon. Gentleman tell us what his right hon. Friend meant when he said that inflation was merely "a blip"?

Mr. Lamont: My right hon. Friend expected that inflation obviously would decelerate more rapidly than it has. However, as the right hon. and learned Gentleman knows, the strong growth and resilience of the economy have made it much more resistant to tightening monetary policy and tightening interest rates than many people predicted at the time. That is a tribute to the resilience of the economy.

Mr. John Smith: rose——

Mr. Lamont: No, I shall not give way.

Hon. Members: Give way.

Mr. Smith: As the right hon. Gentleman knows perfectly well that the word "blip" was intended to mean that inflation would be very temporary and passing, what was the former Chancellor, with the assistance of the right hon. Gentleman, thinking when he gave such misguided advice to the British public?

Mr. Lamont: I have just answered that question—and the right hon. and learned Gentleman knows that I have answered it.
The right hon. and learned Gentleman talks about misjudgments and mistakes that have been made by the Government, but let us look back to what he and his colleagues were saying about the economy. They talk now about our current inflation and about the fact that it has been much higher than the Government expected; but what was happening when the economy was growing strongly—too strongly? The right hon. and learned Gentleman pressed us to give it more and more stimulus. When it was growing faster than for many years, Opposition Members continually urged us to stoke up demand even further. When investment was booming they constantly claimed that it was slumping. 
In November 1987, the right hon. and learned Member for Monklands, East said:
now is the time for cuts in interest rates to stimulate the economy".
We have been over this ground before. The right hon. and learned Member and Conservative Members know of the numerous quotes of comments by the right hon. and learned Member and the Leader of the Opposition. I shall not weary the House by going over them repeatedly, but when the Leader of the Opposition said on "Panorama" that in 1987 he had been saying, "Steady, steady" about the economy, it was the most extravagant and enjoyable piece of fantasy since George IV claimed to have commanded the troops at Waterloo.
It says much about the reality of the Labour party's public spending plans that Labour Members constantly boasted that those plans would be paid for out of faster growth when the country was already enjoying one of the longest periods of fast growth since the war. As the economy grew and living standards rose, all the Labour party could do was to describe Britain in language more appropriate to Ethiopia and to prescribe ever more irresponsible economic policies. When the economy was booming, and indeed growing too fast, Labour Members

described it as stagnant. Now, because the only language they know is that of hyperbole, the moment we get a downturn they talk in language more appropriate to the great depression of the 1930s.

Mr. John Smith: The right hon. Gentleman has repeated the assertion that the only mistake in economic policy was to cut interest rates after the stock market crash. As he knows, most countries cut interest rates, and I think that that was highly desirable. The mistake that the right hon. Gentleman should recognise was for the Government to go on a credit spree and make tax cuts. In January 1988, I said:
tax cuts would feed straight through into increased consumer expenditure, particularly in the prosperous areas, and increase overheating of parts of the economy, exaggerating regional imbalances and, above all, adding a further twist to the increasing balance of payments deficit." —[Official Report, 14 January 1988; Vol. 125, c. 485.]
Let the Government not say that they were not told about the results of tax cuts.

Mr. Lamont: If that is the right hon. and learned Gentleman's analysis, it is the wrong one. The truth is that £2 billion, £3 billion or £4 billion in tax cuts is as nothing compared with the impact of the monetary position. Cutting interest rates has a far greater effect on demand than some marginal tax cuts.
The right hon. and learned Member for Monklands, East hinted in his intervention that he has one policy—to return to credit controls. No one believes in a policy of credit controls. The Government, the Confederation of British Industry and the City do not believe in that policy, and I do not believe that the right hon. and learned Gentleman does either. The rest of the world is abandoning credit controls, but, as always with the right hon. and learned Gentleman, if he can find a phrase he thinks that he has a substitute for a policy.
The right hon. and learned Gentleman spent a large part of his speech talking about recession. It is clear that the economy is now experiencing a marked slowdown—[HON. MEMBERS: "Ah."] The right hon. and learned Gentleman talked about when I appeared before the Treasury and Civil Service Select Committee and said that we were going through a recession and that there was a common-sense definition of recession: business is having a rough time. I said that business was having a rough time. However, I slightly object to the right hon. and learned Gentleman misrepresenting my remarks when he said that I had made a firm prediction that the recession would be short and shallow.
I have the transcript, which shows that I said:
It is very difficult to be absolutely certain about what will be the extent of the downturn but I think there are reasons why one could believe that it will be relatively short lived and relatively shallow.
I made it crystal clear that the length and depth of any recession are subject to considerable uncertainty.
The present slowdown is having an effect both on output and employment. We will see unemployment rise further in the coming months. There are always costs involved in reducing inflation, but the costs of continuing to live with inflation are far higher. Moreover, the costs today are nothing like those that the British economy had to endure in 1981 when we had to squeeze a far higher rate of inflation, which we inherited from the previous Government, out of the system.
There are also significant differences from the situation in 1981. The rate of inflation that we are combating is much lower. The core rate of inflation is less than half of the peak in 1980. Interest rates, although high today, are not as high as they were in 1980. In contrast to what happened in 1980, we have had a gradual tightening of policy. A likely consequence of that is that the downturn will be less markedly sharp.
I have already told the House how the Treasury's forecasts are more pessimistic than those of outsiders. Not just the Treasury but many outside forecasters have predicted a relatively short recession. There can be no guarantee of that. There are uncertainties in the Gulf and consequently for oil prices.
More fundamentally, at home much will depend on the labour market and whether decisions are taken to control labour costs or to reduce investment. That is the challenge for British management. Over the past 10 years, it has been given the opportunity to manage. The choice is simple: if traditional pay bargaining habits do not change, profitability and investment will be sacrificed and the slowdown in the economy will be deeper than it needs to be.
All experience suggests that once inflation is under control there will be a resumption of growth. That was the lesson of 1981 and the 364 economists.

Mr. John Garrett: If the recession proves to be longer and deeper than the Chancellor of the Exchequer expects, what instruments of Treasury policy will he bring to bear to end it?

Mr. Lamont: The hon. Gentleman asked me that question on a previous occasion and I made it clear that I did not believe that we should use fiscal policies to give a short-lived stimulus to demand. We must maintain a tight fiscal policy. The best way to bring about an upturn in activity is to stick strongly to the policy of getting inflation down. That is most likely to bring a resumption of growth again, as our experience in the 1980s bears out.

Mr. Anthony Nelson: Does my right hon. Friend agree that one certain means of ensuring that the recession is deeper and more severe than anyone hopes is for the exchange value of sterling to depreciate? That would significantly increase the costs of imports and raw materials for many industries. That is why my right hon. Friend is right; it is absolutely essential to maintain a level of interest that ensures that the value of our currency is stable and secure.

Mr. Lamont: I am grateful to my hon. Friend. My opening remarks make it clear that I am wholly in accord with what he has said.
The Opposition profess to believe, or to have us believe, to judge from the intervention of the Leader of the Opposition, that nothing has changed in the past 11 years and that nothing has improved. I find it sad that the Labour party does itself and the country such a disservice. It is now, as the economy slows down for the first time in eight years, that the effectiveness of our supply side reforms will be fully tested. We shall discover how much more flexible the economy has become.
There are three areas in which we can see that the economy is much more flexible and adaptable. First, we

now have a much larger small businesses sector than we had in 1980. There are nearly 30 per cent. more firms than in 1980. Secondly, we have a vastly improved climate in industrial relations, thanks to the reforms that the Government introduced. Our measures on the closed shop again make firms much more flexible. They free up the labour market and make wage rates more competitive. We received very little help from the Opposition when we introduced those important reforms. Thirdly, by common consent, British management in the past decade, particularly after the testing times of the early 1980s, has been immensely strengthened and is equal in many respects to the best in the world.
While British business is about to enter a testing time, the House should not forget that it has enjoyed eight very good years in which the United Kingdom moved from the bottom of the European league for growth, investment and productivity to a position at or near the top.
In no economy, not even the German economy to which the right hon. and learned Member for Monklands, East referred, have Governments abolished the business cycle. Different countries are always at different stages in that cycle. Today the German economy is growing more strongly than the British economy, but three or four years ago the German economy was growing less quickly than the British economy. Did we hear about the German economy from the right hon. and learned Gentleman then?
Taking a slightly longer perspective, it is a remarkable fact that during the 1980s the British economy grew faster than the German economy. The 1980s are probably the first post-war decade when that has happened. Our business investment and our manufacturing productivity have also grown faster than those in Germany.

Mr. Rhodri Morgan: Will the right hon. Gentleman give way?

Mr. Lamont: No. As the right hon. and learned Member for Monklands, East said, "I am not giving way and it is clear that I am not giving way". I have already given way several times.
The right hon. and learned Member for Monklands, East from a sedentary position asked about the balance of payments. I expect to see our balance of payments deficit narrow over the year ahead. The trade balance, particularly in manufactured goods, has already improved markedly. The right hon. and learned Gentleman said that demand had slowed, but he did not think that the current account deficit had vanished. It has not vanished, but it seems to have escaped his notice that it has considerably improved. As demand has eased, so has the growth of manufacturing imports, while our share of world exports has actually increased. As a result, our manufacturing deficit narrowed from £4·4 billion in 1989 to £1·6 billion in the latest three months. There has been a distinct narrowing.

Mr. Holt: I am grateful to my right hon. Friend for giving way, in contrast to the Opposition Front-Bench spokesman, the right hon. and learned Member for Monklands, East (Mr. Smith); but the Opposition have never liked to hear good news. With regard to the balance of payments, would my right hon. Friend like to compliment the British furniture industry, which this year increased exports from £475 million to £565 million—an


increase of 16 per cent. against an increase in imports of 2 per cent? That is the kind of good news that the Labour party does not like to hear.

Mr. Lamont: What my hon. Friend says about exports in the furniture industry is true of manufacturing exports generally. Manufacturing exports in this country have been growing very strongly. I was surprised that the right hon. and learned Member for Monklands, East was happy to have his record on world trade contrasted with what is happening today. The United Kingdom's share of world trade under the Labour Government declined, while it has stabilised for the first time in decades under this Government. It has stabilised as a result of the strong performance of manufacturing exports.

Mr. Morgan: Will the right hon. Gentleman give way?

Mr. Lamont: No, I will not give way to the hon. Gentleman.
Looking further ahead, the prospects for British manufacturing in the 1990s remain good. A recent report from Salomon Brothers argued that several factors would combine
to make the UK an extremely competitive offshore manufacturing base from which to tap the booming European market in the 1990s.
The report lists a number of factors that will contribute to Britain's success over the next decade, and it states:
while a description of the UK economy as the Hong Kong of Europe may raise eyebrows, the comparison is increasingly realistic.
That is particularly true of the motor industry. It went steadily downhill in the 1960s and 1970s. It was plagued by poor productivity and a history of industrial disputes.
Over the past few years the story could not have changed more dramatically. There has been a marked improvement in industrial relations. The number of days lost through strikes in the second half of the 1980s was running at one tenth of what it was in the latter half of the 1970s. Market shares and imports have stabilised. Although motor car manufacturers are not immune from the downturn or the effect of a slowdown, substantial investment is taking place in the industry and we expect to see a sharp rise in United Kingdom production over the next few years. New plant capacity for at least 500,000 cars a year will be up and running by the middle of the decade.
Over the next few years the Government's task will be to keep inflation on a downward trend and to build on the achievements of the past decade. We have set ourselves high standards. A couple of years ago it was virtually taken for granted that the Government could go on cutting taxes indefinitely, reducing public sector debt and spending more on public services. Those days will come again. Our achievements over the last 11 years have not crumbled away in the face of inflation. They are lasting improvements and they will be the basis of our policies in the 1990s.
When my right hon. Friend became Prime Minister, he expressed his determination to create an opportunity society in which everyone at every level, regardless of background, would have the opportunity to develop their talents to the full. By holding up that vision, my right hon. Friend was not signalling a new departure. Instead, he was emphasising his intention to build on the achievements of the past decade. The opportunity society and Thatcherite supply side reforms are one and the same thing.
Wider capital ownership; the reduction of union monopoly power; the rise of self-employment; the growth of personal pensions; the break-up of the industrial public sector; the growth of small businesses: all mean greater opportunities for our citizens. For others, increased resources for public services are also part of the opportunity society.
However, it is also important to reform public services so that decision making is taken from bureaucrats and handed back to the people they serve. That is the objective of our reforms in education and health.
My right hon. Friend the Member for Finchley (Mrs. Thatcher), when talking about supply side reforms, said:
the more we foster these things, the more we break down barriers—barriers between workers and bosses, skilled and unskilled, tenants and owners, barriers between private and public. That's the kind of open classless Britain I want to see.
Those words of my right hon. Friend are exactly in tune with those of my right hon. Friend the Prime Minister.
Cuts in taxation are part of the same philosophy because they give the signal that the rewards of hard work can be kept and that people can make their own way by effort and enterprise. All that is anathema to the Labour party. Opposition Members cannot understand that tax cuts and the encouragement of initiative mean opportunities for all. To revive an old distinction: they believe in equality; we believe in the equal right of everyone to become unequal.
Over the next 10 years we will widen further the frontiers of opportunity. It is our aim to ensure that no one shall be excluded, and that is bad news for the Opposition. They know that wider opportunities for the British people mean no hope for them. The Opposition did not transform British industry. The Opposition never could have taken or backed the tough decisions necessary to fight inflation. They failed in the past and they would fail in the future. The Opposition will not be given the chance to fail again. The British people have seen through their sham policies and bogus prospectuses. The Government have had 10 years of challenge and we have a record of which we can be proud. The challenges of the next decade will fall to us and we are more than ready and eager for that task.

Mrs. Irene Adams: Thank you for calling me so early to make my maiden speech, Mr. Speaker. I understand that the tradition of the House is for a new hon. Member to pay tribute to his or her predecessor. In my case, my predecessor was not only my predecessor but my husband. For that reason, I find it particularly difficult to pay that tribute. I have been in the position of many wives of Members of Parliament—and husbands, for that matter—who know the kind of commitment that is needed to be a Member of the House. I should like to pay tribute to everyone who has been a Member of the House and to their wives and husbands for the long-suffering hours with which they, too, have had to put up.
In my constituency, which was my husband's constituency, over the past 11 years we have watched as our industrial base has continually deteriorated. It was a once-proud industrial base. We manufactured cotton, built ships, and carried out light engineering. All those industries have suffered grossly over the past 11 years. The


cotton industry is now just a skeleton of its former self. The once-proud mills stand empty and are falling apart. The people who worked in them lie idle in their homes.
In my constituency there are pockets in which there is 40 per cent. male unemployment. I listen to Conservative Members telling us that industry in their towns is improving. It certainly is not improving in our town. The latest casualty is Howdens in Renfrew. It was a good industry. It had no reason to go downhill, but, because of the policies that the Government have pursued, it has done so. Once more we shall watch the town of Renfrew go into a downward spiral that not only loses jobs at Howdens but loses related jobs—jobs in shops and in other industries that supported Howdens, again adding to the recession of the economy.
For a long time Scottish people have protested. My own grandfather took part in the hunger marches south. That road south has become a boulevard of broken dreams. When they come south, young people, middle-aged people and elderly people are forced to languish on the streets of this city. We do not need to walk half a mile from here to see cardboard cities and young people who are genuinely looking for work and roofs over their heads. What do they find? They find a shop doorway in the Strand with no chance of finding employment and no chance of finding a home.
Before coming to the House last week, I visited Miss Peggy Herbison, who was a Member of the House in 1945. I am sure that many hon. Members will remember her. Peggy told me that she made her maiden speech on housing. I read her maiden speech. She spoke after the war when we would expect housing to have been in a bad condition. What do I find 45 years later? We are in no better position. In this city alone, 9,000 children will spend Christmas morning in bed-and-breakfast accommodation. Things are not much better, despite the efforts of Peggy and many people like her. Still, working people have no roofs over their heads. All they want is a decent home and a decent chance to earn a living. That is not too much to ask.
The Government have presided over a situation that was equalled only by the second world war. Today we still do not have enough housing. It is reckoned that we need 100,000 low-cost rented properties each year even to start to meet the problem. We have no hope of that. If the Government do not intend to change course—from what I heard today, that certainly does not seem to be the case —they should do the honourable thing and move over and let someone who can change course do so.

Mr. Ian Stewart: I have the privilege of following the hon. Member for Paisley, North (Mrs. Adams), so I am the first to be able to congratulate her on her maiden speech. To our pleasure at hearing her I add our sadness at the reason why she has entered the House. She spoke touchingly of the former hon. Member for Paisley, North. Hon. Members respected him, and, no doubt, judging from what we have heard today, we shall equally respect the hon. Lady.
I cannot, I am afraid, say the same about the speech of the right hon. and learned Member for Monklands, East (Mr. Smith). Last week, the Opposition chose to table a

motion on the economy, to be debated in the last week but one before Christmas, because they were not happy about the Government's conduct of the economy and wanted the opportunity to put forward some ideas of their own about how they thought that they would do the job better. As inflation and the level of economic activity are at the heart of the debate, one would have expected to hear from the right hon. and learned Gentleman something new about the way in which his party, if it were elected to government, would tackle inflation. However, all we find on the Order Paper is a recommendation for what I presume must be a dramatic reduction in interest rates —otherwise the Opposition would not refer to the current level of interest rates as crippling—and a great increase in the range of public expenditure.
There is not much that is new in the motion. Labour's policies in government and in opposition have been consistent throughout the time in which I have taken any interest in politics, which goes back quite a long time. All Labour Governments and all Labour Oppositions have founded their policies on substantial increases in taxation and public expenditure. Everything that we have heard from the Opposition demonstrates that that remains their policy.
On monetary policy, which surely should be at the heart of inflation, in the past hon. Members have heard that Labour Members would quite like to introduce credit controls. They have not been saying that so much lately. I do not know whether it is because they realise that credit controls would be a most ineffective way of curbing excess demand in the economy, because they have now decided that the problems of introducing credit controls would be greater than any potential benefits in the short term or because they now recognise that the orthodox policy that has been pursued by the Government of reducing interest rates to curb monetary growth when it gets too high is the right policy. I remember many comments from Opposition Members and from others outside the House over the past year or two that, on their own, interest rates were not a suitable means of countering inflationary pressures. However, in the past they have always done what they were meant to do, for the simple reason that they go to the heart of tackling excess monetary growth. If one raises interest rates, one makes spending more expensive and saving more rewarding. If one wants to act on both ends of the problem by encouraging people to save and discouraging people to spend, a rise in interest rates is not only the best way but virtually the only way of satisfactorily doing so.
The right hon. and learned Gentleman talked about Budgets of recent years. In particular, he drew our attention to what he said in 1988. Over the past few years, the Government and successive Conservative Chancellors have achieved substantial surpluses on the fiscal balance. They have not only eliminated the public sector borrowing requirement, which, in the days of the Labour Government, used to be the great bogey of economic management, but have achieved a series of surpluses in the Budget each year so that monetary policy was fortified by fiscal policy. That has had the advantage not only of encouraging a sound base for the economy but of creating a major achievement in the repayment of public debt, which is valuable. It enables money to be spent on more deserving areas of public expenditure and it also relieves a burden from future generations that should never have been placed upon them.
The Labour party criticises recent Government Budgets, but that criticism is economically wrong and demonstrates that it has a strange sense of priorities. Such criticism is even more amiss when one considers the Labour party's record. It has always been anxious to increase public expenditure. Every time an election is on the horizon, Opposition Members go around trying to find new ways in which to increase public expenditure, because they believe that their party will be popular if they intend to spend money on this and that. They never explain how they would pay for such expenditure, but we know. They would do so partly through higher borrowing, which forces interest rates up and encourages inflation, and by increasing taxation. We know that, because that is what they did in the past.
I remember well my first election campaign when I was returned to the House. Then, the right hon. Member for Leeds, East (Mr. Healey) was going around the country saying that he wanted to squeeze the rich until the pips squeaked. He sought to pay for the extravagant Labour programme of increased public expenditure by imposing taxes on higher earnings. However, in the second half of the 1970s, when the right hon. Gentleman was Chancellor, the rich became everyone other than those on supplementary benefit. The tax burden was increased not only for those on higher rates of income tax but for all on the basic rate. The squeeze that the right hon. Gentleman imposed on taxpayers then should be a warning to anyone who now believes that a Labour Government would not increase taxes for those on ordinary levels of income.
The Government's current economic strategy is just about correct. I say "just about", because I do not believe anyone could say with precision when the necessary steps in monetary and fiscal policy to manage the economy out of a period of slower growth back to the sustainable level of growth of the 1980s should be taken.
The House should recall that, in 1981, a Conservative Chancellor was heavily criticised by 364 economists—my right hon. Friend the present Chancellor referred to them —and by many others in this House and outside for maintaining a tight fiscal policy and tight monetary conditions at a time when the economy had slowed down rapidly. We were told that if we maintained that posture the only possible outcome would be a deeper and longer recession from which the economy would never be able to recover. I remember those circumstances especially well because I happened to be the Parliamentary Private Secretary to the then Chancellor. I also remember that it was not long after that 1981 Budget that the economic recovery began. That confused all the great pundits who said that that could never happen. My right hon. Friend and his successor, now our Prime Minister, were right to be cautious about being hurried into reducing interest rates or easing the fiscal policy to give the economy an artificial boost. That is the last thing that is suited to our current economic circumstances, as it would be the quickest way to renew the inflationary pressures that have caused our present difficulties.
Since August there has been increasing evidence that the economy has been slowing down in the way the Government intended. Figures for monetary growth now suggest that inflationary pressures have significantly abated. The latest figures for MO suggest that it is hardly growing and, on an annual basis, it is well within its band. The figures for M4 are also falling. The figures relating to retail sales, especially pre-Christmas sales in the high

streets, and the message from industry suggest that the excessive growth in the economy in the past two years is now being corrected. From here on, my right hon. Friend the Chancellor will have the task to manage the economy in such a way as to return us to sustainable growth within the framework of the exchange rate mechanism.
The ERM, however, imposes disciplines that are not always understood. In the past, interest rate policy could be determined almost solely in terms of domestic considerations, but now the exchange rate will also act as a guide and constraint. It is perfectly correct that that should be so. I noted the important passage in the Chancellor of the Exchequer's speech today when he said that we had no early plans to change from the wider 6 per cent. band to the narrow 2¼ per cent. band. That is a wise decision, because if we move to the narrow band in the near future it would constrain my right hon. Friend's ability to deal with changing economic conditions and monetary policy needs at a time when we are moving from a period of disequilibrium to one of sustainable growth. If we move to that narrow band now, during that period of transition, constraints could be placed on my right hon. Friend that might be against the interests of our domestic economy.
The main danger against which my right hon. Friend must guard is increasing recessionary pressures more than inflationary ones. Until three months ago there was a danger that inflationary pressures would revive quickly. I now believe, however, that that is no longer the case. In the next few months it will be possible to reduce interest rates as the inflation rate comes down. My right hon. Friend, as Chancellor, cannot make immediate forecasts about such matters, but when the retail prices index is published at the end of this week I expect it to show a significant reduction and to be down to single figures. I also expect the figures for the underlying rate of inflation to show that it has also passed its peak. Those circumstances, coupled with the evidence concerning the money supply, suggest that a reduction in inflation and a reduction in interest rates are appropriate.
My right hon. Friend should be cautious, however, not to follow the advice of the Opposition who want a dramatic reduction in interest rates from what they describe as their present crippling levels. Such a sudden change would be counter productive, as it would risk setting off the type of inflationary pressures with which we have grappled in the past two years. That would not be in the economic and political interests of the country.
Much of the comment that one reads these days suggests that my right hon. Friend and other Treasury Ministers are motivated purely by the political calendar when taking economic decisions. I am absolutely sure that that is not so. That charge was levelled against my right hon. Friend the Prime Minister when, as Chancellor, he reduced interest rates by 1 per cent. in October. I have no doubt that the economic conditions justified that reduction from the high level of 15 per cent. As and when my right hon. Friend the present Chancellor judges it right, I am confident that he will reduce interest rates. He. will do so, however, only when he judges it to be consistent with managing the economy back to sustained growth without rousing the inflationary pressures that have caused us so many difficulties in the past.
The great lesson to be drawn is that inflationary pressures will revive unless we are constantly vigilant to ensure that they do not. If there is one lesson to be learnt


from the episode of 1988 it is that we must watch at all times for all the economic indicators—not only money supply but asset values and many other signs from which to judge the level of activity in the economy. If there are signs of overheating, the sooner a response is made through interest rates, even though that may be unpopular in the short run, the better it will be for the economy. And what is best for the economy is no doubt the best for the party of Government in due course. So I encourage my right hon. Friend to stay on that course.
It is essential for the future prosperity of this country that we do not have another Labour Government. I thought that we might perhaps have heard some more this afternoon about the Opposition's approach to economic management, but I suspect that I was not the only Conservative Member who was not surprised when nothing was forthcoming. If the Opposition spell out their economic policies in great detail between now and the next election, I hope that they will be candid about them. When promising to spend £ billion on certain areas of public expenditure—education, training, schools, roads or housing—they must explain how they will finance them. Unless they spell out how they will finance the extra expenditure that they tend to promise at this time in a Parliament and in election campaigns, they will be no more credible than they were in the past three general elections.
There has been some speculation that the right hon. and learned Member for Monklands, East would be a more credible Leader of the Opposition than the present leader. In some respects that is a sensible view. Although his speech was devoid of content, at least it showed a vigour of presentation and an amusing turn of phrase here and there. The difference between the shadow Chancellor and the Leader of the Opposition is that the latter does not know what he is talking about but is very willing to talk about it, while the former knows quite a lot—enough not to talk about it at all.
Under these circumstances, the country is fortunate not to have a Labour Government, with their high taxes and high spending policies, to deal with inflationary pressures now and for a long time to come. We are fortunate to have my right hon. Friend, with whom I had the privilege of working in the Treasury, for whom I have a high personal regard and whom the country can count itself lucky to have as Chancellor of the Exchequer.

Mr. Alan Williams: I congratulate my hon. Friend the Member for Paisley, North (Mrs. Adams) on a most moving and eloquent maiden speech, in the course of which she probably made many friends on both sides of the House and made friends with their families because of her understanding of what the families of Members of Parliament have to endure due to the peculiar ways in which the House operates. Her constituency must be proud that one family has produced two such able. representatives.
The Chancellor of the Exchequer and I are old sparring partners. He shadowed me when I was at the Department of Industry; I shadowed him when he was at the Department of Trade and Industry. We rarely agreed but

we remained friends. I have bad news for my hon. Friends: what we heard today was one of the right hon. Gentleman's more scintillating performances.
I was somewhat concerned to hear the Chancellor repeat the Prime Minister's phrase that we want an opportunity society. I well remember sitting in this Chamber 11 years ago listening to the then Chancellor presenting the first Budget of the incoming Thatcher Government. In his speech he declared that he had just given his opportunity Budget. That opportunity cost us 23 per cent. inflation, 3 million unemployed, the destruction of 20 per cent. of our manufacturing industry and the loss of 30 per cent. of manufacturing investment. So I am not sure whether the country can stand too many Conservative opportunities.
The fact that we are holding this debate is a demostration of this. We are discussing, according to the motion, a recession. I wish I were convinced of that. I suspect that we are beginning a return to a syndrome—to the stop-go cycles of the 1950s, 1960s and 1970s under both Administrations——

Mr. Robert Hughes: I am sorry to interrupt my right hon. Friend, but I should like to advise the House that the monitor shows a Mr. Robert Hughes speaking. Neither I nor the hon. Member for Harrow, West (Mr. Hughes) is speaking, so perhaps the monitor could be corrected.

Mr. Williams: As the hon. Member who has been credited with my speech—my hon. Friend the Member for East Lothian (Mr. Home Robertson)—is the only other Member sponsored by the Transport Salaried Staffs Association, I am delighted. I am happy that what I have to say should be credited to him——

Mr. Robert Hughes: The monitor has my name on it.

Mr. Williams: My Friend is to be congratulated on his eyesight, and I apologise to him if anything that I am about to say causes him embarrassment.
Members on both sides of the House know, even if they will not admit it for political reasons, that we should not be discussing a recession. After £130 billion worth of production from the North sea, we should not find ourselves fearing a return to recession and to a cycle of recession. We should be entering a period of continuous golden growth, high investment and high earnings. If someone came to a surgery of a Conservative Member —that is, if Conservative Members hold surgeries—and said that he had won the football pools 10 years before, sold his business, remortgaged his house, lived it up and had a great time for 10 years but was now down on his uppers, I wonder how much sympathy he would receive from a Conservative Member. None at all, I suspect. Yet that is exactly what the Government have done. They picked up the £130 billion output, sold off the family business and spent the money, remortgaged—and they are still in trouble, as is the country.
If the seven—or eight, as the Chancellor would claim —fat oil years are over, the stores are empty for the seven lean years to come. But the Government have squandered more than just money—which, admittedly, they have squandered on a profligate scale. They have also squandered the one and only opportunity that we have had in the post-war period to break away from the inexorable stop-go cycle and to break into a virtuous spiral


of continuous growth and high investment. The only chance that we have had, a chance given us by oil, has been wasted: hence today's debate.
Sad to say, we are not talking about one downturn in isolation. The pattern is all too familiar. I see that the hon. Member for Horsham (Sir P. Hordern) is in his place. He and I debated economic issues on many occasions in the 1960s and 1970s. We both entered the House in 1964. We recognise that what is happening now is a similar downturn in investment and in research and training. All the symptoms were described by my right hon. and learned Friend the Member for Monklands, East (Mr. Smith). It is a familiar pattern of returning to stop—the stop that has haunted each post-war Government.
When the Chancellor shadowed the Department of Industry in which I was a Minister, he used to despise what we called the industrial strategy, My hon. Friends who were in the House at the time will remember what it was. It had to do with preparing to take finite resources from the North sea and turning them into investment in our manufacturing industry. The right hon. Gentleman used to bleat about the appalling burden that that placed on business. For the equivalent of 1p on the standard rate of tax, under section 8 of the Industry Act 1979 alone when we left office there was £2·5 billion of manufacturing investment in the pipeline. That was a record level for the post-war period. Unfortunately, it was thrown away.
The abandonment of the industrial strategy led to the waste of Britain's finite resource. None of it was invested where it was needed for the long-term benefit of the country. Instead of using those resources for investment, the Government cut manufacturing investment to a level that was the equivalent of having stopped all manufacturing investment for three of the last 10 years. The well-established shortfall for failing to maintain the 1979 level of investment is £20 billion, and that would have created a new Nissan plant every other year. That illustrates the scale of investment if the Government had maintained the level that they inherited.
When the Chancellor and I switched places and I was shadowing him, we were in a Committee which sought to abolish the regional development grants. At that time the Chancellor said that the trouble with the Opposition was that they were "dewy-eyed" about manufacturing. I have never forgotten that phrase. He saw the future in services, but it is a pity that at that stage in his career he did not shed a few tears for manufacturing industry. If he had, perhaps he would not have destroyed one fifth of our manufacturing base.
The nonsense of the comparison between services and manufacturing is revealed by the balance of payments mess. A chain of takeaway restaurants may be very successful, but it in no way contributes to easing the balance of payments problem. However, workshops producing goods that would otherwise be imported or producing goods for export do make a contribution to solving that problem. That is the fallacy of the Government's argument.
The Chancellor boasted about our manufacturing trade balance having improved somewhat. He boasts about turning what the Government called an inefficient manufacturing industry which earned a surplus of £6 billion on international trade into an efficient manufacturing industry which contributes to a deficit of £6 billion.

That is a peculiar triumph. We cannot afford the Government's successes; they are too costly. If we have many more such successes, the country will be bankrupted.
The Chancellor makes great play of the discipline of the ERM and says that the Opposition do not understand it. The right hon. Gentleman does not understand that there would be more discipline if the industry that the Government have destroyed had remained, because discipline is concentrated on industries that are affected by international trade through overseas competition and the need to export. Because the Government destroyed so much of our manufacturing base, the discipline that the Chancellor talks about, the screwing down of the economy as a result of our membership of the ERM, impinges on only one fifth of Britain's employment. If that is the discipline that the right hon. Gentleman thinks will on its own inevitably produce the turnaround that he wants, I have news for him: it will take rather a long time.
The Sunday Times said that entering the ERM was the Government's golden scenario. It spoke about the protection offered by the ERM, the fall of inflation and interest rates, GATT and the timing of an election. I see the same sequence of events, and I shall shortly deal with them, but I see them not as a golden scenario but as the Government's desperate and only scenario. They have no other ace to play. Membership of the ERM was the only economic option left to them and they had to gamble on it. They have to hope that the play-off between what I shall call the political economy and the real economy will work in their favour in the middle of next year.
The real economy shows soaring bankruptcies, unemployment increasing by more than 500,000, falling investment and lower expenditure on research. The indicators are plummeting. They are all on red alert. However, the political economic indicators will for a while be favourable to the Government. Inflation will fall, not because the Government have done anything right but because they have not repeated last year's mistakes. As last year's mistakes fall out of the index, which shows just the rate of increase and not an improvement in inflation, merely a change in the rate of growth in inflation, it will seem to move in the Government's favour. The Government hope, and the Chancellor has made clear, that as a result of that they will be able to reduce interest rates. By so doing they hope to be able to reduce mortgage rates.
In a previous speech in the House I said that a cut in the mortgage interest rate of 3 percentage points is equivalent to an income tax cut of 3 percentage points because it releases £6 billion of purchasing power. For the Government, that has the great advantage of efficiency because, instead of costing them that amount in lost tax revenue, it costs them only £1·5 billion under MIRAS that they lose on mortgages. However, that is a tangent. If the Government achieve what they want, which is what most commentators accept as the possibility of a change in interest rates, then for a limited period they will inject back into the economy £6 billion of purchasing power which they hope will see them through the next election.
The Chancellor referred to the £3 billion by which the Government hope to reduce overseas loans this year. They do not need to pay that and, if necessary, that money is available to the Chancellor in the Budget. My hon. Friends should be aware that that money may be available as a political ploy. The Government advance strange argu-ments. They see it as a virtue to pay back money that they


borrowed at stable low-interest rates, but they do not seem to understand that that leaves us increasingly dependent on hot money, the £30 billion to £40 billion at volatile interest rates which plays the market and which has flooded into the country. It is not the ERM that has trapped us with high interest rates but that hot money which the Government must keep in Britain. If it were not for the volatility and the fear that private investment in Britain would rush out, the Government could have the interest rates that they need. They talk about paying off debt, but the only way in which they can finance their deficit on overseas trade is by massive private debt.
The Government hope that they will have the chance of an election before the situation turns grim. Money will go into the mortgage holders' pockets and then into the shops, creating a temporary uplift in demand. But one third of it will go overseas and an extra £2 billion worth of imports will flood in. Towards the end of next year, the balance of payments position, the interest rate position and the rate of inflation will all worsen.
We have to ask the Government what will happen if the so-called golden scenario does not work out. The pound is perilously low within the allowable thresholds. If the interest rates that they are assuming in their autumn statement do not turn out as they have predicted, we shall be discussing a movement not into recession but into a full-scale slump. There is a danger that we shall move from the oil-plentiful 1980s into the dismal 1990s.
I do not care what Ministers have said: we moved into the ERM at the wrong rate. The Chancellor of the Exchequer told the Treasury Select Committee, if I understood the newspaper reports—my hon. Friend the Member for Durham, North (Mr. Radice) was there—that the rate was right because we had gone in at about the average in relation to the exchange rate with the deutschmark over the past 10 years. On what does he base that as evidence of it being right? Over the past 10 years, we have ended up with a trade deficit of £20 billion, despite the fact that we had £130 billion worth of North sea oil to replace imports or to sell abroad. Therefore, what he calls the right level in relation to the deutschmark means that, far from being able to pay our way, we have been living above our long-term means at the rate of £150 billion over 10 years. That is the gap that needs to be made up. What nonsensical assessment leads the Chancellor to think that the level against the deutschmark that led to a deficit of £150 billion can lead to the breakout into the growth economy that he claims that he wants?

Mr. Tim Smith: If the right hon. Gentleman feels that we went in at the wrong rate, what does he think would be the appropriate rate?

Mr. Williams: Approximately 10 per cent. lower would have been right. As hon. Gentlemen will know, the assessments made by industry of the uncompetitiveness of British manufacturing when compared to our competitors overseas led the CBI to believe that approximately 10 per cent. below the present level would be the right one.
We are talking about, and making points against each other about, a single rate. If we were to adopt as a single rate the level of exchange established as a central position of the ERM, we should condemn ourselves to a return to an immediate post-war trend. When the war ended, for

prestige reasons, because the pound was the international medium of exchange, we tied ourselves to an historical rate against the dollar that was unrelated to the economic realities of the trading positions of the United States and Britain. Hon. Members will remember that every Thursday everyone would go to read the tapes at midday to see whether the bank rate had gone up or gone down and to see what the latest jump or change in the interest rates was as we tried to sustain our sterling level against the presssure of international speculators. That happened under Governments of both parties.
There are limited hopes of short-term recovery. Last week, I discussed with an ex-official of mine—we had together dealt with inward investment and spent a lot of time working abroad talking to overseas business men—investment in Britain. I found salutary and saddening a comment that he made about the future of investment. He is now with one of the major heavy industrial companies. He said that, if there were an upturn, his company would want to sustain the quality of existing plant but that if it were to expand and invest more, it was not sure about investing in Britain.
The logic of what has happened in eastern Europe is that Japanese and American capital, know-how and technology will move there because of low wage levels. Britain will not be able to compete in domestic manufacturing. His fear was that heavy industry, engineering and so on, would have to look to investment overseas. In the 1970s, the Benelux triangle was the black hole that drew in most of the petrochemical investment in Europe, and my friend predicted that what is happening in eastern Europe, as German and Japanese capital goes in, will lead to a similar situation with manufacturing capability moving eastwards across Europe, particularly if eastern European countries become members of the EEC, as many of us hope they will.
The Chancellor—to mix my metaphors somewhat oddly—as an ex-Minister in the Department of Trade and Industry, has found some of his dead ducks coming home to roost. He is now finding that what he helped to kill while in the Department of Trade and Industry is coming back to haunt him, particularly the industry that he destroyed. The country must mourn the fact that what we have lost is our one opportunity—[Interruption.] The hon. Member for Beaconsfield (Mr. Smith) may find this funny, but I have served in four Departments, and the hon. Gentleman and I have followed economic issues for many years. No one has been able to break the stop-go pattern, and the eventual historical assessment of the past 10 years will be that an opportunity existed but was wasted.

Sir Peter Hordern: I congratulate the hon. Member for Paisley, North (Mrs. Adams) on her admirable maiden speech. It used to be said that a maiden speech should be uncontroversial, but I detected some controversial words and phrases in her speech, and I thought all the more of it for that. However, I greatly regret that there were not more hon. Gentlemen here to listen to her speech. I am sure that it will read well. I regret that the length of the speech made by the right hon. Member for Swansea, West (Mr. Williams) probably had something to do with the fact that there are not enough


hon. Gentlemen present to keep the debate going. I wish that there had been, to hear the admirable speech of the hon. Lady.
I am surprised that there are not more hon. Gentlemen here to listen to and take part in this important debate on the recession. I should have thought that both sides of the House would be crowded, especially as the terms of the motion are savage in their condemnation of the Government's policy. For example, it
calls upon the Government to lower the crippling level of interest rates".
As we heard from the right hon. and learned Member for Monklands, East (Mr. Smith), it has long been the Opposition's policy that Britain should be a member of the exchange rate mechanism. Knowing that the right hon. and learned Gentleman understands a good deal about the ERM and knowing our place in the ERM at the moment, I cannot understand why he has been willing to put his name to a motion that calls for lower interest rates. Perhaps the hon. Member for Derby, South (Mrs. Beckett) can help the House, as she, too, knows where sterling stands in the ERM. It is almost at the bottom of the range, yet the motion calls on the Government to lower the "crippling" level of interest rates.
I can only assume that what is envisaged is a substantial reduction. I see that the right hon. and learned Member for Monklands, East is in his place once more, so let me ask him what effect a reduction in interest rates would have on our position in the ERM.

Mr. Graham Allen: rose——

Sir Peter Hordern: I am not asking the hon. Gentleman.

Mr. Allen: I would love to help the hon. Gentleman.

Sir Peter Hordern: The hon. Gentleman does not speak on this subject with the same expertise as the right hon. and learned Member for Monklands, East. I have enormous admiration for him, but not on economic matters. But I should be quite happy to defer to the right hon. and learned Member for Monklands, East should he wish to intervene. [HON. MEMBERS: "Unfair."] Hon. Members say that the question is unfair, and I understand that, but I still do not see how Opposition Members can justify lowering interest rates, given our position in the ERM at the moment. The truth is that it cannot be done, and it is perfectly phoney to suggest that it can.
I do not think that any of my hon. Friends would deny that we are in a recession, whether shallow or deep. But we have started from a very high level after eight years of uninterrupted growth. The right hon. Member for Swansea, West said that he and I could recall many instances of stop-go, and we can. But I do not ever recollect an eight-year period of go, and it is therefore not surprising that there should be some slowdown.

Mr. Alan Williams: What about North sea oil?

Sir Peter Hordern: The right hon. Gentleman reminds me that he said during his speech that we had had the benefit of £130 billion-worth of North sea oil.

Dame Elaine Kellett-Bowman: And a lot more debts.

Sir Peter Hordern: I shall come to the question of debt a little later. First, let me concentrate on the question of the £130 billion-worth of revenue from North sea oil. I often wonder why the Opposition do not recognise, and speak proudly about, the purchase and acquisition of

overseas assets by British companies during the past 10 years. In case hon. Members are not immediately aware of the figures, I remind them that we have invested £1·50 billion all over the world—a good deal of it in the United States—from which we are deriving a substantial benefit. We have more per capita invested overseas than any other country, not excluding Japan, and certainly not excluding the United States. So, from the point of view of assets, we are substantially better off than we have ever been.

Dame Elaine Kellett-Bowman: Does my hon. Friend agree that the fact that we have repaid Labour's debts has been immeasurably beneficial, given the present high level of interest rates? If we had not done that, the outflow of funds would be enormous.

Sir Peter Hordern: As always, my hon. Friend makes a perspicacious observation. She is absolutely right, and I shall be returning to the question of debt a little later.

Mr. Alan Williams: The hon. Gentleman made a point about investment overseas. Asset value is meaningless, because the assets are not realisable. They are of value to Britain only if companies refund and repatriate the profit. Most companies are using the money in the host countries or re-investing there. That means that we have exported not only our capital but our jobs.

Sir Peter Hordern: The right hon. Gentleman does not appear to appreciate what happens when one invests abroad: one receives dividends and a return on those investments. That is the position today, and we are reaping enormous rewards from our investments which will last us and our successors for generations to come. We are in art extremely strong position.
Our capital investment during the past few years has not been confined to overseas investments alone. To hear Opposition Members speak, one would think that there had been no capital investment in this country for the past few years. In 1983, the total fixed capital formation in Britain was £53 billion; last year, it was £81 billion. It is only marginally down on that figure this year, so we are talking about a high level of domestic fixed capital formation.

Mr. Robert Hughes: The hon. Gentleman cannot have listened to what the right hon. Member for Henley (Mr. Heseltine) said during his brave but failed bid for the premiership. The right hon. Gentleman made it plain that one of his great concerns was the substantial fall in manufacturing investment in Britain. He said that we could not depend on service industries for our wealth and that the Government had to intervene in industry. What has changed? Or perhaps that is why the right hon. Gentleman has been made Secretary of State for the Environment.

Sir Peter Hordern: During his election campaign and long before it, my right hon. Friend spoke of the marriage of private and public sector investment in the inner cities, and in Liverpool in particular. My right hon. Friend has a very good policy which he advanced extremely well.
Capital investment in Britain has increased substantially during the past few years. Moreover, Britain has acted as a strong magnet to overseas investment, not least in the motor industry but in many other industries too. I understand that, in the past few years, we have attracted


more investment than any other European country. That being so, the Labour party is in no position to criticise us for our lack of capital investment.
It is perfectly true that, in terms of unemployment, the outlook is not good, but, given that there are now 2 million more people at work than there were in 1979, it is rather short-sighted of Labour Members to criticise us.
As my right hon. Friend the Chancellor admitted, if anything, growth in Britain has been a bit too quick. It could not have been sustained. For a long time, monetary aggregates had shown that demand was increasing too fast, and that credit, especially, was being advanced far too far. In 1985, for example, bank lending amounted to £20 billion. It rose to £60 billion in the four years to 1989. That progression was far too fast for comfort.
I confess that I do not see an easy time ahead. In terms of disposable income, there is no question but that young people—especially those with large mortgages—are feeling the effect of high interest rates acutely. There are no exemptions. We are not talking about a north-south divide; young people with large mortgages in my constituency are being squeezed hard. It is perfectly true that, on top of that, they have to put up with the community charge. One of the difficulties of the charge is its unpredictability. No one can say what it will be from one year to the next, and it is very difficult for people to manage.
Having said all that, I believe that, unlike other recessions that I have known, this is a perfectly manageable recession, because it is a private sector phenomenon and has not been brought about by an imbalance in the public sector. Matters were very different in 1979, as my hon. Friends will well remember. In 1979, the public sector borrowing requirement accounted for 15 per cent. of all revenue from tax and national insurance contributions. That is an enormous proportion. Because of that large public sector borrowing requirement, the private sector was badly squeezed.
I looked carefully at the Opposition's motion, as the House would expect. It calls not only for a reduction in the
crippling level of interest rates"—
it does not say how the Opposition would achieve that —but calls upon the Government
to reverse the cuts in public investment in training and support for industry, and to promote the modernisation of British industry through the application of new technologies, the adoption of a sustained programme of regional industrial development".
All those items would involve a substantial increase in public expenditure, and we have every right to ask how that money would be raised. Would it be through higher taxes or through more extensive borrowing? How can a programme of higher borrowing be sustained at a time of high interest rates?
Perhaps the most difficult thing of all to understand —although by no means unique—is the Opposition's programme to renationalise water and electricity, which are two firm commitments. How will that programme be financed? The Opposition do not say at what price the shares in electricity and water companies will be renationalised. It may be a low price—we simply do not know. If it is, it would be an absolute disgrace.

Mr. John McAllion: A great deal of money is involved.

Sir Peter Hordern: The hon. Gentleman is right. How would the Opposition raise such a large sum of money? They would have to add that borrowing to the already large public sector borrowing. That would be inevitable, given the Opposition's large public sector programme. It is an incredible programme. The private sector would not give the Opposition any credibility, either now or during a general election, because the Opposition's programme is incredible——

Dr. Norman A. Godman: Wait and see.

Sir Peter Hordern: We will indeed see.
The Government must control total public expenditure or there will be too high a burden on the private sector. I include local authority expenditure within the total of public expenditure, because that is how it is treated in the public sector accounts—and it is right that it should be. However hard we try, it is extraordinarily difficult to control local authority expenditure by any rational means without bludgeoning and capping local authorities. It is clear that the increase in local government expenditure during the past few years is unsustainable.
Part of the Opposition's programme is a commitment to increase expenditure on education. It is clear that, if we allow more money to go to the schools, and if additional funding must be raised through the community charge, the penalty through the community charge will be far too high. There is a strong case for transferring the cost of education from local government to the state. That should be carefully considered during the current review of the community charge. There is an excellent case for doing so, because there is now a national curriculum. Local education authorities can manage such a system, but the Government should be responsible for paying for the programme. I agree with the Opposition that education is a priority, and that we cannot ignore it.

Mr. Patrick Thompson: I agree with my hon. Friend about education. Will he say more about the implications for income tax?

Sir Peter Hordern: I have seen some estimates for that. My understanding is that, if education were immediately transferred to the central budget, that would cost 3p or 4p in the pound. However, much more important, if we take into account how much money will be taken out of people's pockets—that is, if we combine the cost of the community charge with income tax—the position is nowhere near as bad. It would halve the cost of the community charge. It is a serious national priority which should be carefully considered.
There are a number of supply side matters to which we should pay careful attention, and in particular the importance of the GATT negotiations that have been imperilled by the negotiations about the common agricultural policy. I am beginning to think that the negotiations on the CAP are too important to be dealt with by Agriculture Ministers. They should be confined to Trade Ministers. I do not even believe that the CAP really helps farmers, which is what it is supposed to do. The GATT negotiations are more important than the preservation of the CAP, and I hope that, by one means or another, we get rid of it.
I want to say a word about the role of interest rates. Some people say not only that they are far too high but


that we are far too dependent upon them. It is likely that, compared with the rate of inflation, interest rates will remain somewhat higher than we have been accustomed to since the war. We may be entering a period of conditions that we have not experienced for 50 years, with the rentier coming into his own. In other words, the real rate of return on interest will be higher than the rate of inflation—something that has not occurred for a long time.
Because of our position in the exchange rate mechanism, it is important that the retail prices index should be properly compared with that of other countries. Investors outside this country look to the real rate of return, which is the difference between the rate of inflation and the rate of interest offered. Our RPI should be on a basis comparable to that of other European countries. That would result in a significant reduction, which would help our position within the European Community and within the ERM.
As my right hon. Friend the Chancellor said, there is a certain prospect of lower inflation followed, in due course, by lower interest rates. Reports of an economic collapse, which have been suggested by the Opposition, are rather like the reported death of Mark Twain—greatly exaggerated. We have every reason to look forward to a better period, with lower interest rates and lower inflation. Nevertheless, I think that the recession may be rather longer than has been our experience with previous recessions, but I am confident that my right hon. Friend's handling of the economy, and the courage that he and his predecessor brought to the task by keeping interest rates uncomfortably high, is the right approach to the central priority of reducing inflation.

Mr. Gordon McMaster: I am delighted to have caught your eye so soon after my arrival in the House, Mr. Deputy Speaker. It is fitting that I should have an opportunity to make my maiden speech during a debate about the recession, because it has hit my constituents very hard.
I thank those hon. Members who worked so hard to ensure my election to the House and those hon. Members, on both sides of the House who welcomed me here and offered me advice about my maiden speech. The most common piece of advice was that I should ignore all advice and that is what I have chosen to do.
I know that it is the convention of the House for a new Member to pay tribute to his predecessor. Even if that had not been the convention, I would have chosen to do so. I know that I speak for all hon. Members when I pay tribute to Norman Buchan, a man who was loved by many and respected by all. During his 26 years in the House, he touched the lives of many people here, in his constituency and elsewhere. He was a man of great principle, warmth and intellect and, as many hon. Members will know, before he entered the House he was a teacher. He used his great skills of communication to inspire and encourage others and I think that it is fair to say that he was always the teacher.
Many hon. Members will also know that Norman Buchan had a passion for the arts, especially Scottish folk music. The most fitting tribute that I can pay him is to quote from a song about him. It is in characteristic dialect, but that enriches it rather than detracts from it.

"He's a fighter, he's a dancer 
He's freedom's greatest fan

When the chips are doon
Yon Buchan loon
Wee Norman is your man."

That is how many of us remember him.
The constituency of Paisley, South, which I have inherited from Norman Buchan, needed and needs the kind of representation that he provided, because it is a microcosm of industrial Scotland and the problems that beset it. I have lived in the constituency all my life and I started work there too. I remember the bus journey that I used to take from my home town of Johnstone to my work in Paisley early every morning. It was quite a job to get on a bus 15 years ago. The streets were throbbing and bustling with people all going to work in the mills and the large factories. A school leaver taking that same bus journey today would see decay, dereliction and despondency.
Paisley is famous for the Paisley pattern. It is known throughout the world and it was at the forefront of the textile industry which employed many thousands of people from the town and surrounding areas. Now it employs no more than a few hundred. The massive mills that once housed those thousands of workers now stand as idle and rotting monuments of the industrial decline that we have seen during the past decade.
It is sad and shameful that there is no large-scale manufacture of any Paisley pattern goods in the town of Paisley. My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) referred to the need for partnership; the need to explore new markets, to invest in research and development and in export drives. There is great potential there for that.
There is also in the constituency the village of Elderslie, the birthplace of the Scottish patriot, William Wallace. It is also the home of Stoddards, the carpet manufacturer which produces some of the highest quality carpets in the world. I am sure that those carpets grace some of the corridors of this place.
Johnstone, my home town, also has a rich industrial heritage. It was the home of the first machine tool foundry in the world. It trained men who could twist and turn metal at will into useful components. Unfortunately, that is no longer the case, because no major factory does such work any longer.
When I was considering material for my maiden speech I referred to the maiden speech made by my predecessor in 1964. In that speech, Norman Buchan referred to the new industrial complex of Rootes and Pressed Steel, which is now in the constituency of my hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham). That, too, has now closed and many people who lost their jobs there have never worked since. Those people have been stripped of the dignity of being able to make their full contribution to society and to the economy.
Male unemployment in the constituency was 11·7 per cent. in October. That meant that 2,754 people competed for 420 jobs, many of which were low-paid and part-time. As my hon. Friend the Member for Paisley, North (Mrs. Adams) said, in the past few weeks we have seen the closure of the Howdens factory in Renfrew, once a market leader in the production of equipment for renewable energy—something which is taking off all over the world in these days when environmentally friendly products are all the rage. That factory closed, making 500 people redundant, because there was none of the investment in research and development and export drives which Howdens' competitors received from their Governments.
However, I must pay tribute to the regeneration of the economy by the local authorities, the Scottish Development Agency and some of the business community in Renfrew district. We see the lunar landscape of the Talbot factory being regenerated to breathe new life into the area. It has been turned into a retail industrial and residential development and that is welcome. Renfrew district, and Paisley in particular, is bidding to make our area the home of Scotland's national stadium. If any Conservative Member would like some advice on how to stay out of Europe, I am sure that such advice could be obtained from the supporters of St. Mirren. It would be only natural for that national stadium to come to the home of St. Mirren.
In conclusion, I want to make a suggestion that would have a major social and economic impact in my constituency. In 1979, when the Government took office, 34 per cent. of Renfrew district's housing budget was paid by the Exchequer in the form of a housing support grant. We have not had a housing support grant for many years. If that grant were restored to its former level of 34 per cent., £11 million would be put into the local economy which would improve homes, reduce homelessness, create jobs and stimulate the local economy.

Mr. Tim Smith: I congratulate the hon. Member for Paisley, South (Mr. McMaster) on an outstanding maiden speech. Like him, I was elected to the House at a by-election and I recall the apprehension with which I made my maiden speech. I congratulate the hon. Gentleman on the confidence with which he made his.
I remember Norman Buchan well because he was one of the first Labour Members of Parliament whom I met after I came into the House in April 1977. We appeared together on "Panorama". One of the issues during my by-election —this demonstrates that times do not change greatly—was rising prices and inflation. It was thought that I must be some sort of expert on the subject and I was drafted on to "Panorama" as a young and rather green Tory Member. Needless to say, Norman Buchan outpointed me completely.
The electors of Paisley, North and Paisley, South are fortunate in the representatives whom they have sent to the House. We look forward to listening to the hon. Members for Paisley, North (Mrs. Adams) and for Paisley, South with the greatest respect. I congratulate them both.
If it is the Opposition's duty to criticise the Government's economic policy, Conservative Members are equally entitled to examine carefully the Opposition's motion to try to establish precisely what the Opposition would do to rectify the current situation. There is not a great deal of dispute about the fact that the economy has slowed down substantially. We all have businesses in our constituency and talk to local business men. We all know what the situation is. I was talking to my local chamber of commerce only last night. We all know that there has been a substantial slowdown in the economy since the summer. The question that the House must consider is what is the right way to tackle the problems that we now face.
The Opposition argue that we should have a substantial cut in interest rates. That is the implication of their use of the word "crippling" in their motion. They also argue that

we should increase spending on training and support for industry, apply new technologies, adopt a programme of regional industrial development and increase the provision of education and training—all involving more public spending. Yet the hon. Member for Derby, South (Mrs. Beckett) tells us that Labour's only firm public spending commitments at present are to increase child benefit and retirement pensions, which, she explains, would be paid for by higher taxation. We understand that, but, if higher economic growth is not possible without an increase in public spending, how can it be secured by a Labour Government who have made a commitment not to spend in that way initially, but only to increase child benefit and retirement pensions? There is a conundrum here——

Mr. Allen: rose——

Mr. Smith: —which the hon. Member for Nottingham, North (Mr. Allen) is about to explain.

Mr. Allen: Is the hon. Gentleman admitting that, when we win the general election—perhaps early in the new year we shall be taking over an economy that is not growing?

Mr. Smith: The hon. Gentleman has obviously not listened to what I have been saying. I have already said that we all know, from talking to business men in our constituencies, that the economy has slowed right down. I doubt whether it is growing at present; it is impossible to tell for certain, but, according to my local chamber of commerce, the position has changed radically since the summer. There is no doubt about that.
I represent a prosperous area with a high employment level. I am told that the Gerrards Cross post office is now fully staffed: that is the bellwether test in my constituency, and shows that the economy has slowed down. There is normally a shortage of labour in my area, and the post office finds it difficult to recruit. But I do not think that that is the point at issue; the point at issue, surely, is what is the right way to tackle the problems. There are only two ways in which we can establish what a Labour Government—if we have the misfortune to have another —would do: one is to examine current statements and the motion that we are discussing, and the other is to examine the record of Labour Governments.
The right hon. Member for Swansea, West (Mr. Williams) was a Minister in the Labour Government who produced the highest inflation and the highest public sector borrowing requirement that the country has ever experienced and also presided over a fall of 2·5 per cent. in manufacturing output.

Mr. Richard Page: I do not like to hear my hon. Friend criticising the previous Labour Administration in that way. We know that he would not have won Ashfield and I would not have won Workington if that Administration had been a success.

Mr. Smith: I suppose that every cloud has a silver lining: I concede that my hon. Friend and I were both beneficiaries of the Labour Government's inability to manage the economy. It would not have been possible to overturn a Labour majority of 23,000 in my case, and, in my hon. Friend's case——

Mr. Page: A mere 10,000.

Mr. Smith: —had the Government of the day not been deeply unpopular.
Let me return to the present day. Some have suggested that nothing has been achieved over the past 11 years and that the current recession is in some way similar to that of the early 1980s. I believe that anyone who knows anything about the real economy will understand that the underlying economy has been transformed—that it is far stronger than it was 11 years ago. Over that period, average growth has been 30 per cent. faster than the OECD average. Manufacturing productivity has increased substantially: the gap per worker between the United Kingdom and Germany was 37 per cent. in 1980, and is now down to 8 per cent. The growth of the smaller businesses is also very significant. The past decade has seen a substantial shift in employment patterns.

Dr. Lewis Moonie: What about large businesses?

Mr. Smith: That is exactly the point that I am about to make. Large businesses used to be the principal employers —[Interruption.] Let me explain the position to hon. Members who seem to be having some difficulty in understanding. In 1979, companies employing fewer than 200 people employed 27 per cent. of the work force. By 1986, the figure had risen to 36 per cent. Companies employing more than 500 people were employing 43 per cent. of the work force in 1979, but by 1986 the figure had fallen to 29 per cent. That shows the way in which the economy has diversified and demonstrates the vibrant growth of small businesses. More evidence is provided by the VAT registration figures, which show a constant growth over the past decade in the number of businesses registered for VAT. Even in 1989, the number of registered businesses grew by 5 per cent.

Mr. Allen: I thought that the theory was that the small businesses would proliferate and that some would be so successful that they would become big businesses. In that case, surely the figures for big business should be higher.

Mr. Smith: Oh dear, oh dear, oh dear. There are many more small businesses than there were 10 years ago. Of course some will eventually become large businesses; many were formed relatively recently. The point is that, while in many constituencies—sadly—a large proportion of the work force used to be dependent on a single employer, there are now many employers. That must surely be more satisfactory from everyone's point of view.

Mr. George J. Buckley: That is because some of the large companies have undertaken massive redundancy programmes owing to the current high interest rates.

Mr. Smith: I accept that there were many redundancies in the early 1980s, because there was substantial overmanning in many large businesses. Since then, however, manufacturing industry has become much more productive and profitable. That is one of the reasons for the substantial growth in inward investment over the past 10 years. The United Kingdom is now an attractive investment target, because it offers a low-tax regime, a deregulated economy and good labour relations, which was not the case 11 years ago. As my hon. Friend the Member for Horsham (Sir P. Hordern) pointed out, overseas investment has also increased. After 30 or 40

years, the decline in Britain's share of world trade has finally been arrested. It has yet to begin to increase, but at least the decline has stopped.
There are many reasons for all these changes. One is the improved quality and professionalism of management in British industry. That is partly due to investment in the universities in the 1960s. The fact that that investment resulted in economic fruition only in the 1980s, when managers in their late 30s and early 40s were starting to take over companies and run them much more professionally, is an indication of how long it takes for changes in education and training to feed through. [AN HON. MEMBER: "We had a Labour Government then."] It may have been Labour; it may have been Conservative. My point is that it takes a long time for us to benefit from investment in education. As a result of that investment, however, we now have much better marketing services, financial control and manufacturing systems.
Another example of the success of the policies of the past 11 years is the growth in the venture capital industry, which barely existed 11 years ago. We have also seen the development of the unlisted securities market and the third market, and the encouragement of small companies on the stock exchange. In all those different respects, the economy is far stronger today than it was 11 years ago.
The underlying strength of the economy meant that the measures that we introduced two years ago, including higher interest rates, took longer to work through than anyone forecast. It is true that the Treasury got its inflation forecast wrong, but so did all other economic forecasters. We had high interest rates for two years, but the economy refused to slow down. I believe that it took longer this time because the economy was so much stronger than it was before.
We must not repeat the mistake of returning to a monetary policy that is too lax. We must continue with a firm monetary policy. The evidence is that it is now working. M0 is down and is within its target range. When the retail prices index falls, as it will on Friday, I hope that it will soon be possible to cut interest rates. I hope, too, that next year it will be possible for us to move to the narrow band within the exchange rate mechanism. I listened to what my right hon. Friend the Chancellor of the Exchequer said about the timing. He may be right. If, however, we are genuinely committed to the ERM, we should move to the narrow band at an early opportunity, to provide industry with the stability that it needs to plan ahead. It wants stable exchange rates. We should, therefore, move into the narrow band as soon as it makes sense to do so.

Dr. Moonie: What evidence does the hon. Gentleman have that the narrow measure of money is an accurate reflection of what is going on in the economy?

Mr. Smith: I should have thought that the amount of notes and coins was a primary indication of the amount of money that is available. I accept, however, that it is not the only one. I am not an economics expert; I am just a poor accountant. The hon. Gentleman ought to ask an economist, but I understand that M0 is the amount of notes and coins in the economy. That seems to me to be a good primary indication of the amount of money in circulation. I accept that we must also look at wider definitions, including the amount of credit. M0 is only one indicator, but it is one of the more credible indicators.

Mr. Allen: rose——

Mr. Smith: I have not yet finished my speech. I sat down because I thought that the hon. Gentleman wanted to intervene.

Mr. Allen: The hon. Gentleman has already had 10 minutes.

Mr. Smith: The right hon. Member for Swansea, West took 26 minutes. The hon. Gentleman must be patient.
As for our fiscal policy as we approach the Budget, the autumn statement suggests that there will be a public sector debt repayment this year of £3 billion. The Treasury's medium-term objective is to have a balanced Budget. As we are in a recession, it would be reasonable to aim for a balanced Budget next year. When it proves possible, I want income tax cuts to be made, but what is even more important is to find ways to encourage savings. The Prime Minister has placed great emphasis on the need to encourage savings in the 1990s if we are to fund the investment that is needed from domestic sources. I agree with him that we should endeavour to do that, if at all possible.
The problem at present is that we do not have a level fiscal playing field; it is tilted sharply in favour of owner-occupied housing. Sooner or later, the House will have to address that problem. It is not an easy one to solve. We understand the political sensitivities of mortgage interest tax relief. The hon. Member for Nottingham, North has made his views clear on that subject. He believes that it should be abolished. We need to look at it again. It costs £7 billion a year. Capital gains tax relief amounts to another £7 billion a year. We must reconsider the way in which we tax housing and compare it with the way in which we tax production investment. We must encourage people to save more and try to encourage a savings culture. I hope that my right hon. Friend the Chancellor of the Exchequer will address that issue in his Budget.

Mr. A. J. Beith: I congratulate the hon. Member for Paisley, South (Mr. McMaster) on his excellent maiden speech. I echo his words about his predecessor. He was a formidable fighter and a notable orator whose memory in the House will live for a very long time.
I congratulate also the hon. Member for Paisley, North (Mrs. Adams) on her effective maiden speech. Apart from being a good speech, it was a courageous one. As she made it, it must have brought back many memories of her husband, whose loss we also lament. It cannot have been an easy speech for her to make. I congratulate her. Her speech suggested that she will be a worthy successor to her much-lamented husband. When she spoke of people leaving Paisley in search of work, she reminded me of my great-grandfather, who was a hand loom weaver in Paisley. He moved to Glasgow to find work when major industrial change put all the hand loom weavers out of business in the 19th century. Paisley has been losing people ever since, and it still happens.
In his speech, the Chancellor of the Exchequer uttered some memorable phrases. One of them will join others in the annals of political slogans that people wish they had never invented. He referred to the "equal right to become unequal". I think that it will join "On your bike" as a phrase that Conservative strategists will wish they had not

been landed with. For most people, it is just the equal right to stay unequal. That is the experience of many of my constituents. The phrase will come back to haunt the Chancellor and other Conservative Ministers.
I was also struck by the Chancellor's reference to people making their own way and breaking down the barriers between the workers and the bosses. He quoted the former Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher). Her last wish was granted under the new Administration. The former Prime Minister's son, grandson and descendants for ever after will enter the social stakes with the advantage of a title to their name. The achievement of a classless society by a party that still sets great store by hereditary titles seems to me to be impossible. If one believes that people should have additional advantages at birth, through an hereditary title system, one cannot be committed to a classless society.
One of the features of the Chancellor's speech and of the debate as a whole—which is, perhaps, a surprise—is that argument across the Chamber has ceased about whether there is a recession. It is now accepted in all parts of the House that there is a recession. The only argument is about how long it will last, how deep it will be and what is its cause. The recession may not last all that long, but I suspect that it will be a deeper recession than the Government believe. It could become very much worse if events in the Gulf take a serious turn for the worse. They could have a disastrous effect on both the world economy and the economy of this country.
I believe that the recession will be quite deep. Companies now respond more quickly to recession than they did in the early 1980s. After the experience of the 1980s, they have shed labour quickly. We are therefore likely to see unemployment, even with the much-altered figures, rising rapidly as companies shed labour. I doubt whether they will ever again take on much of that labour. Employment replacement will depend almost entirely on the smaller business sector. That has important implications for Government policy, which they must begin to recognise.
The most striking feature of this recession is that it need never have happened, at least on this scale. There is always a business cycle, with its tendency to go down as well as up, but I do not believe that we should be facing a recession of the scale now expected but for the Government's failure to control inflation.
Why is there a recession? The immediate cause is high interest rates. The reason for high interest rates is the Government's failure to conquer inflation. They greatly worsened inflation by combining tax cuts with hasty credit liberalisation and general economic mismanagement. The Government greatly fuelled the inflationary fires and we are paying the price. They still have no long-term policy to drive inflation out of the system. Ministers even seem to be pleased at the prospect that both the headline and the underlying rate of inflation will be in the 5·5 to 6·5 per cent. range some time next year—perhaps towards the end of next year. I emphasise that the underlying rate of inflation will be at about that level. The two rates are likely more or less to converge.
With rates of inflation at that level, I do not know how Ministers can speak with pleasure and satisfaction about them. If the Conservative party were in opposition, it would be deeply and bitterly critical of such levels of inflation.
The policies that the Labour party advocates in its motion are, in many respects, useful policies that will assist industry in seeking to get out of the recession. However, they all have an inflationary downside. It is not safe to put such policies into operation unless one also has long-term measures to tackle inflation. We need a firm anti-inflationary framework.
I agree that it is desirable to stimulate investment in research and to increase spending on education and training. Indeed, I believe that spending on education and training cannot wait until we have the economic improvements to pay for it. That expenditure is the seedcorn which is necessary if we are to secure economic improvement. Therefore, if necessary, taxation might have to be increased so that we can make that education expenditure. The Labour party has tried to dodge that by saying that the majority of taxpayers will not face any increase at all and that only high-rate taxpayers and people on high incomes will face an increase in income tax.
I am not sure that Labour would be able to deliver the increases in education and training expenditure that may prove necessary without tax increases. I hope that it will be possible to do so, but there is no certainty of that.

Dr. Jeremy Bray: It is interesting to hear the hon. Gentleman speak on these matters. How quickly would he expect the effects of increased educational expenditure to come through in increased growth?

Mr. Beith: They come through quite slowly. The hon. Member for Beaconsfield (Mr. Smith) pointed out earlier that the university expansion in the 1960s is only now beginning to work through our system. That strengthens the argument for increasing education expenditure early and for not saying that that is one of the many desirable things that will be done once we have sufficient economic growth to pay for it. Many improvements in social welfare and public service provision will probably have to wait for the economic improvements that will pay for them.
My contention is that we must move ahead with the education and training improvements and with some of the transport improvements, including those relating to the channel tunnel link, if we are to bring about the economic growth we seek. As I have said, some of those policies have an inflationary downside, which is why we insist that they must be backed by an effective long-term anti-inflationary policy. We have set out our view in our amendment.
The Prime Minister has claimed that he will make the battle against inflation his top priority. One of this first utterances on becoming Prime Minister was:
First and foremost, I loathe inflation".
That phrase is similar to those that were used by his predecessor. The right hon. Member for Finchley was just as strong in her belief that inflation was evil and should be driven out of the system, but she failed miserably to conquer it. She went out of office with headline inflation at over 10 per cent. and with a high rate of underlying inflation. The Prime Minister will fail if he continues his opposition to the anti-inflationary policies that our competitors have used so successfully.
We argue that, in order to have an anti-inflationary framework, we should seek membership of the narrow. band of the exchange rate mechanism so that there can be no doubt about our intentions towards our currency. Today, by saying that we would not join the narrow band,

the Chancellor sought to state that we are quite secure in our currency and that there is no danger of any revaluation. However, it takes more than a statement at the Dispatch Box to achieve that. The clear placing of the currency within the narrow band is a much more convincing statement about its future than anything that is said at the Dispatch Box, which can subsequently be overtaken by events.
We also argue that progress towards a single currency is an important component of an anti-inflationary policy, as is central bank autonomy in respect of monetary policy, and the prudent use of fiscal policy, including levels of taxation, in order to regulate demand. Taxation increases may well become necessary at some point, not for public expenditure reasons, but to regulate demand. The Chancellor's failure to recognise the importance of tax policy in demand management is a mistake that he should not make, having observed what happened during the tenure of his right hon. Friend the Member for Blaby (Mr. Lawson), when tax reductions had a considerable effect on demand. They created expectations that people were free to borrow substantial amounts of money, and demand was greatly increased.
I believe that the new Prime Minister intends to change the tone and style of the Government's approach on European matters. There is a reasonable prospect that he will have a successful visit to the Rome conference. It seems possible that the Prime Minister could achieve a new fudge—a new statement based on the hard ecu plan, which might be accepted as a basis for further discussion by our partners in the Community, and one which suggested that the plan could lead to a single currency. Our partners would then accept that our Prime Minister was acting in good faith in subscribing to a plan with that possible destination. There is a prospect of the right hon. Gentleman returning from Rome with an agreement between ourselves and our European partners that will make the conference look like a success.
However, that is only the beginning. The Prime Minister must then face the Bruges group and his right hon. Friend the Chancellor, who appears to be in sympathy with the Bruges group. He will also have to face attacks from Conservative Members who do not want to have anything to do with a single currency or central bank independence. They want none of it. The issue of Europe will come back to haunt the Conservative party again and again.
As I have said, I expect the Prime Minister to make some progress at the Rome conference, but why does he not take the opportunity to build in the anti-inflationary mechanisms that have been so successful in our partners' countries, which have a better inflation record than our own, and with whom we compete in trading terms?

Mr. Tim Smith: Does the hon. Gentleman agree that the principal merit of the hard ecu proposal is that it is strongly anti-inflationary?

Mr. Beith: Yes, but its principal demerit is that it is regarded by many people in most other countries as a confused and unlikely way to arrive at a single currency, which is their objective. They will want to see a plan that provides a clearer route to a single currency. The hard ecu plan has many other complications. It is not yet clear to me at what stage the hard ecu will be legal tender and when my


constituents can demand to be paid in it instead of in depreciating sterling pounds. That crucial issue needs to be resolved.
However, because our partners in Europe are so keen to secure our participation, there is some prospect that a new fudged scheme will emerge from the Rome conference. What interests me, however, is whether we shall get the real advantages of a single currency and of an anti-inflationary mechanism within a reasonable period. I do not believe that the Prime Minister is in any position to do that. Many of those who helped to make him the leader of the Conservative party are determined that he will not do any of those things. I believe that that determination will become clearer and that the back-seat driver and others will make it clearer in the coming weeks. This is not an issue of a simple difference of view; it is an issue on which some Conservative Members obviously feel deeply. The former Prime Minister is one of them, and I do not believe that she will abandon those convictions for a moment.

Mr. Martin M. Brandon-Bravo: Before the hon. Gentleman moves from the European part of his speech, will he explain how the phrase "central bank autonomy" in his party's amendment, which I assume means separate from Government, sits alongside the rest of the amendment, which refers to things that are clearly the responsibility of Government? How can those two things sit together?

Mr. Beith: In just the same way as they sit together now in the Federal Republic of Germany, where the central bank has autonomous responsibility to maintain price stability and its monetary responsibilities are related to that maintenance of price stability. It still rests with Chancellor Kohl to make the decisions, which he has taken, about German unification and about progress towards a single currency. Sooner, or later, the Germans —and others in the Community—will want to make clear their view that they are not prepared to be part of any single currency scheme that does not have the principal attribute of the deutschmark at the moment—that of a non-inflationary currency, protected by a central bank, the prime responsibility of which is price stability.
Our economic prospects will be a great deal better once we have sound money. Conservative Members' unwillingness to back sound money is one reason for their failure to sort out the problems of our economy. What worries me is that, by the middle of next year, the Government will want to claim, with some satisfaction, that they have achieved an underlying inflation rate of 5 or 6 per cent. —to refer to 5 per cent. is to be over-generous to the Government—and a place for Britain in the slow lane of Europe, with some possibility that we might eventually join the single currency. That is not a reasonable proposition to offer this country. The country deserves and can achieve much better than that, but it will require more radical policies than the Conservative and Labour parties are prepared to undertake.

Mr. Peter Viggers: I am grateful for the opportunity to contribute to the debate because the speeches have been interesting and of high quality. Some

of my colleagues, although not trained as economists, have demonstrated the truth of a saying that sometimes comforts me: there are no good economists. Anyone who is sensible and understands money becomes a banker. However, I enjoyed my hon. Friends' contributions very much.
I should like to single out three speeches, including the maiden speeches of the hon. Members for Paisley, North (Mrs. Adams) and for Paisley, South (Mr. McMaster), which were exceptionally good. They caught the ear of the House and we all look forward to hearing those Members again. If only, when I make my speeches, I could gather the sangfroid that they appeared to have, I should be grateful. I very much admired their speeches. The third speech which I should like to single out is that of the right hon. and learned Member for Monklands, East (Mr. Smith). It was interesting and amusing, as his speeches always are, but it could be characterised for its lack of content. It was extremely thin. I hope that the hon. Member for Derby, South (Mrs. Beckett) will answer some of the questions that were put to the Opposition. We want to know the Labour party's thoughts on matters such as credit controls which it has espoused in the past but upon which there has recently been deafening silence.
Economics is more of an art than a science. Some commentators speak as though it is easy to handle the economy, but it is not. It is complicated and uncertain. Our market economy has served us exceptionally well. It is easy to compare it with the centralised, socialistic economies of eastern Europe and the bureaucratic economy of the Soviet Union. Even Albania is moving away from a centralised economy. I, for one, think that China cannot stand aside from this indefinitely.
The market economy means that the Government's role is limited to ensuring that the market can operate freely and without hindrance. The Government's role is to promote free choice, to lessen controls and to ensure that any inhibitions on the market economy are diminished as much as possible. Of course, some elements of control are necessary, in exactly the same way as there is a need for a highway code and other regulations to explain and to control driving on roads. We cannot have people deciding where they want to drive on the road any more than we can have people deciding how to operate in the economy. Nevertheless, it is the job of the Government to lessen the effect of inhibitions on the economy if they can. That is why, as one of our first operations in government, Sir John Nott, the then Secretary of State for Trade, abolished exchange controls. We cannot have a market economy and total centralised control. Any commentator who thinks that the economy can be readily controlled, as if this were a centralised economy, is wrong.
It follows that the weapons of control are necessarily blunt. That is why the Government's role should be to provide a framework within which the economy can operate successfully and then exercise that most difficult of all qualities of Ministers—reticence. That is what we have done since 1979, and the benefits have come in abundance. We have had extraordinary growth, with a growth average of rather more than 3 per cent. a year between 1981 and 1989. Productivity is well up. The profitability of companies is up. Last year, business start-ups were running at about 1,700 a week——s

Dr. Moonie: Closures.

Mr. Viggers: I heard the word "closures". This year, there will be a net increase in business start-ups. Some 67 per cent. of people now own their own home and prosperity has been widely shared. One reason why it has been possible for businesses to operate in such a successful environment is that the Government did not shrink from grasping the nettle of the problem of the overpowerful unions. One significant factor in the economy's success over the past 11 years has been the curtailment of union power.
What would the Labour party do at present? I, too, studied the Labour party's motion. It calls on the Government
to lower the crippling level of interest rates".
If there were a large reduction, it would be as inevitable as night follows day that the value of the pound would fall, the cost of imported component parts for industry would increase and inflation would be fuelled.
The Labour party urges the Government
to reverse the cuts in public investment in training and support for industry".
I support that call in respect of training but not in respect of support for industry. I submit, with deference, that if anyone in the House can claim to have some small knowledge of Government money being used to support industry, it is me, because for three years I was responsible for the economy of Northern Ireland. In 1986, I inherited an economy where the amount of money going into industry, especially to state-owned operations—Short's aircraft company and Harland and Wolff—was so great that latterly it seemed that we were subsidising those companies to the tune of about £15,000 per man per year simply so that they could stay in business. The more I saw of the business of those two companies, the more I realised that it was crucial that they should move from the public to the private sector, allowing normal private sector decisions to operate.
Those transitions to the private sector have worked well. The quality of the management and men belied the lack of success of those companies. Of course there were bright, capable, hard-working people in the companies, but Government decision making and Government funding led to bad decisions all along the line and to senior management coming to my Department at the end of each year to explain how much extra money was needed to keep their companies in business.

Mr. Stuart Randall: Is not the hon. Gentleman's line a little absolutist? I could quote a number of examples from my 25 years in business and industry showing where Government and public money was used effectively. The Scottish Development Agency has had terrific success in stimulating manufacturing industry, particularly high technology.

Mr. Viggers: Of course I recognise that public money can be extremely useful in promoting industry, but it is available for support in industry in appropriate cases and in appropriate ways, particularly training—one aspect which I singled out and exempted from my criticism of the Labour party's motion.
Labour's proposal is to put more money into support for industry and
to promote the modernisation of British industry through the application of new technologies".
Surely that is what industry should be doing and exactly what the Government should not be doing. In my

experience, the Government are not well suited to making decisions about the modernisation of industry; I prefer to leave that to industry.

Mr. Randall: The hon. Gentleman suggests that the two cannot operate together. Surely if this is done carefully and sensibly and the private and public sectors work together in certain parts of the economy, that can bring terrific results. By taking an absolutist view, the hon. Gentleman is brushing away one important area where the economy could be stimulated.

Mr. Viggers: Of course, everything is not exactly black or white—there are shades of grey. Nevertheless, I would maintain the main thrust of my comments: when the Government approach industry and say, "We want to help you", that is when industry should worry. Industry should be the motor of development. I have been consistently disturbed to see the extent to which industry is quite good at reshaping itself to take advantage of Government grants and loans, ending up in a distortion of the judgments that should be made by industrial leaders. They should be taking decisions to make profits for their companies so that they can employ more people, produce more profits and export more. They should not always be looking over their shoulders to see how much Government grant they can get. I believe from my hands-on experience that Government funding can distort the fount of industry. That is why I oppose the Labour party's motion.
Apart from the motion, we do not know what the Labour party has in mind. We do not know whether it supports credit controls. The hon. Member for Islington, South and Finsbury (Mr. Smith), who I believe is a Labour Front-Bench spokesman on Treasury matters, says that they "can be circumvented". The right hon. Member for Llanelli (Mr. Davies), who is a former Labour Treasury Minister, described credit controls as rubbish. The right hon. and learned Member for Monklands, East says that imposing credit controls will not be easy to achieve without exchange controls. I agree with that. Credit controls would be difficult to impose. They work only at the margins.
Most people who wish to control credit home in on credit cards. According to the Central Statistical Office figures, credit card lending in 1989 was £7 billion whereas the amount of lending on property and property-related purchases was £255 billion. Credit cards are at the margins. Property and property-related financing is at the root of our present overheating.
Economists talk about monetary aggregates. I prefer to think in terms of the property market and property borrowing getting out of hand. Clearly the right instrument to take to such frothy expansion in the property market is the weapon of high interest rates. There are signs that that weapon is working.

Dr. Moonie: Does the hon. Gentleman believe in correcting the market distortion caused by tax relief on interest payments for house purchase?

Mr. Viggers: My hon. Friend the Member for Beaconsfield (Mr. Smith) commented on that, and I do riot wholly demur from what he said. The amount of mortgage lending which is tax relieved is comparatively small and would not have much effect on the property market. We need a weapon which works on prices and the right weapon is interest rates.
Initially there was a shock as vendors ceased to put their properties on the market. Gradually prices came down and now we have a much sounder base. I know that business and industry are in great pain, but the fundamental underpinning of the market, which involves property values, is on a much sounder basis. Property prices are edging gradually upwards and the position is now sound. I expect the recession to bottom out in 1991 and growth to resume thereafter.
I want to make sure that, as growth returns, more people can share in it by being shareholders. Privatisation has improved the position. I proudly declare an interest as the owner of 100 shares in London Electricity and 100 in Southern Electricity. Despite the criticisms, the price was right. It should be gauged on the full price of 240p per share. Anyone with any knowledge of funding and new issues knows that the line between success and massive oversubscription and failure is a narrow one. The issue has been a considerable success, which is nothing less than I would have expected from my right hon. Friend the Secretary of State for Energy whose skill in this and other matters is exceptional.
We have attracted 5·7 million new shareholders through electricity privatisation, 4·5 million through gas privatisation, 5 million through the flotation of the Trustee Savings bank and 2·3 million through the privatisation of British Telecom. We now have 11 million shareholders. However, shareholdings run wide, but not deep. Of those 11 million shareholders, 6·5 million have shares in only one company and only a third of a million people have anything that could be described as a share portfolio. The result is that, whereas in 1975 40 per cent. of shares by value on the stock exchange were held by private shareholders, now only 20 per cent. are. That has an impact on the Treasury's approach to savings.
Our savings ratio of gross domestic product is only 3 per cent. compared with 8 per cent. in France, Germany and the United States and 15 per cent. in Japan. I hope that the Treasury will do something to improve our savings ratio by improving the number of private shareholdings.
I understand that there is a working party on savings within the Treasury. I hope that it will look at the cost of share transactions and the taxation of share profits. I should like to signal the idea that shares which have been held for more than one year should perhaps be exempt from capital gains tax. The amount yielded in that way is not much. I urge greater simplicity. Even personal equity plans and tax-exempt special savings accounts have their complications. I urge more use of the investment trust and unit trust vehicles and ask the Treasury to exempt them so that they, too, can be used within the PEP and TESSA structures. That is important because if more people can be encouraged to be shareholders, more would have a stake in the country. They would parallel the 67 per cent. who now own their own house. Stock exchange shares are a good investment. A £1,000 investment in 1980 would have increased to £4,000 by 1990, whereas the same sum invested in a building society would have increased to £2,200. I hope that the Treasury will encourage more people to become shareholders so that they can share in the prosperity which I am certain lies ahead with the Conservative Government.

Mr. Jimmy Wray: I congratulate my hon. Friends the Members for Paisley, North (Mrs. Adams) and for Paisley, South (Mr. McMaster) on their eloquent speeches. I know how difficult it must have been for my hon. Friend the Member for Paisley, North, who has replaced her husband who had many friends here. The quality of their speeches will undoubtedly continue in the new year, and I thank them for that.
Today we have heard the Conservative Government's jumble-sale economics. It is sad for me and my constituents that the Government believe that they are on the right road. They are on the road to ruin, and the nation knows it. They do not understand economics. Now that they have picked the new Errol Flynn of the Conservative party, the crown prince brings a new dawn. He does not understand. Before we are finished with him, he may not be too pleased that he accepted the job of Prime Minister; he will probably be happy to have his application for a job as a bus driver accepted.
The Treasury record of this great man who has been appointed in the past two or three weeks is appalling. Since April, during his term there, 100,000 people have lost their jobs and some 22,500 businesses have gone down the drain. For three years he agreed to freeze family allowance to the poorest and most vulnerable people. That from the man who says that he believes in a classless society. If he does, he must understand about classlessness. He must possibly have read the dialectics of Karl Marx and Hegel. They might give him a wee bit more education on socialism and classlessness. He must also have read "Wages, Price and Profit". Yet it is obvious that neither he nor his party is aware of the seriousness of following their present course.
Some 22,000 homes have been repossessed because the Government have brought the economy to the sorry state that it is in today. Think of the thousands of people who have suffered because of the Government's mistakes. This year, 95,000 people are more than six months in arrears with their mortgage payments. The rest have had their houses repossessed. That is the kind of caring compassionate Government we have. It would be better for this country if we got rid of them. They have brought, and will continue to bring, nothing but disaster.
The Government say that we are in recession, while some say that we are moving on. How can we move on with a trade deficit of £16·9 billion? How can we move on when inflation, which was 5·3 per cent. when the Prime Minister was at the Treasury, has risen now to 11 per cent.? Do the Government realise that people have no jobs and no future while they are sitting in wine bars and opera houses? That is the kind of society they want. There is nothing in Pandora's box for the poor. We want to change all that. We want to rid this country of the kind of policies that the Government have produced.
The Chancellor of the Exchequer said nothing about the reality of the economics. He said that manufacturing industry is booming. When the Government took over in 1979, there were 7·2 million employees in manufacturing. There are now 5·2 million. If manufacturing industry is booming, as the Government claim, what happened to the other 2 million employees? What happened to the investment? Investment in manufacturing industry has


dropped by 7·5 per cent. this year. Textile workers have been hit hardest. There were 450,000 textile workers in 1979, but 25,000 jobs have been lost.
The trade unionists know what the Government are up to. They know that you have sold off the country's assets. They know that you are getting ready to do a deal in the GATT negotiations in July to clear up the problem. If the Government break the multi-fibre arrangement, another 100,000 people in the textile industry will be forced on to the dole. You do not realise what you are doing.
You sit there and talk about——

Madam Deputy Speaker (Miss Betty Boothroyd): Order. I know that the hon. Gentleman respects the Chair, and I am sure that he will make his remarks through it.

Mr. Wray: Thank you very much for reminding me.

Madam Deputy Speaker: I know that the hon. Gentleman gets carried away, but he must respect the Chair and make his remarks through the Chair.

Mr. Wray: The Government said that there was no slump and that things are booming. The construction industry training board had to fork out £1·25 million from its reserves to provide training opportunities for young school leavers who could not get sponsors. The industry is short of 2,000 trained skilled workers. If we have to build an economy, we obviously have to train the men and women to build it.
We are on a downward slope. We have heard all kinds of promises from the Government. They promised that interest rates would come down, but they have risen from 8 per cent. to 15 per cent. They have gone through the roof. The property market has slumped after people had to pay £70,000 or £80,000 for a property. That is the reality of this Conservative Government and their policies. That is what we must change.
The Government want to know what the Labour Government will do. We will take back the assets that this Government took from the working class people of this country. We will show the Government what compassion is. We will give the poor some of the coppers that the Government put in their own chalices.
My constituency has one of the worst unemployment rates in Britain. Some 18·6 per cent. of my constituents claim unemployment benefit. We have to understand what unemployment means to the four or five people in a family who are on the dole. It means poverty and sickness. Not very long ago, soup kitchens were being opened in my constituency because the social security office closed down.
People in work today should help those who have no jobs. They are only a job away from social security, and the people on social security are only a Giro away from starvation. More than 5,000 people are unemployed in my constituency. There has always been a recession in my constituency. There has been no change. We know all the ins and outs of social security.
It is bad enough to have to live and work in a constituency that is rife with poverty, but this gang brought out the Social Security Act 1989, which was intended to jackboot the working class and the unemployed. As a result of that Act, when people go to collect their dole money, they act like beggars. They have to prove that they are looking for jobs when there are no real jobs to be found. However, there are plenty of cheap

jobs with low pay. Claimants have to satisfy the adjudication officer, and that has led to a drop of 40 per cent. in the number of claimants.
We should not be kidded by the Prime Minister's compassion. He has condoned the nation's poverty. He will not bring prosperity to the people of Britain; he will bring doom. They might have changed the jockey, but they have not changed the horse, and the horse is running in the same direction. It is time that we exposed the Vincent Price of politics. He will be feasting like a vulture on the weakness of working men and women. That is the kind of politics espoused by the Prime Minister and his gang of thieves.

Several Hon. Members: rose——

Mr. Wray: No, I have not finished. I was simply pausing. I have sat here for five hours, and I sat in the Chamber for eight and a half hours one day last week without being called to speak. Mr. Speaker patted me on the back yesterday and told me that I would be called today. He knows that his eye has not been in my favour for some time and I hope to catch his eye again after Christmas.
A Conservative Member referred earlier to the community charge. The Government know that that is their death knell. We may be witnessing the last ever Conservative Government. Every elector in the country knows that the poll tax is unjust and unfair. Is it not sad that the Government have allowed £3 billion for the review of the community charge? Do they know what is happening in Scotland?

Mr. McAllion: No.

Mr. Wray: Well, perhaps I can give them some of the statistics. In 1989, 14·7 per cent. of the community charge in Scotland remained uncollected. In Strathclyde, one of the biggest regions in Scotland, the figure was 17·4 per cent. Scottish authorities have had to find £47 million to keep services going. In December 1990, 59·2 per cent. of the community charge bills has still to be collected. That is not the result of a massive non-payment campaign. It stems from the fact that people are finding things difficult. The Government introduced the community charge and they have broken up families throughout Britain.
The Government are not going to change their policies. Of the £623 million that presently remains to be collected in Scotland, £289 million is owed in Strathclyde and that represents 63 per cent. of the total. That is the economics as far as local authorities are concerned. We must not forget that, in the 1970s, we were paying 75 per cent. to central Government.
Conservative Members talk about democracy and accountability. There is no accountability or democracy, because, almost pound for pound, the burden has been transferred back from central Government to local authorities. The Government are finding it very difficult. They are cutting housing grants and everything else they can cut to make life hard for the poor and luxurious for themselves. That is what they believe in. Today, the Chancellor said that there is an equal right to become unequal. That was a poor statement. The former Chancellor did a better job.
The Government are now asking us for advice. They have been in government for 11 years and they are asking us to get them out of the poll tax mess. What happened in


1801 will happen again—the people marched in, dragged the Government out, and strung them up by the neck for implementing the poll tax. The Government will certainly need to abolish the poll tax. They know that it is unjust. The Layfield committee, which was set up to inquire into local government finances, told the Government that it would be difficult to implement the poll tax.
Hon. Members are waiting to speak. They have been sitting here for five hours, just as I had to. The Government and the Prime Minister are not kidding the poor. We will jackboot them, just as they jackboot us. It is time that the Government called a general election so that we can find out who is right and who is wrong.

Mr. Richard Page: I shall certainly not try to join the hon. Member for Glasgow, Provan (Mr. Wray) in his vehement style and uproar against the inflation rate of 11 per cent. If I were to do so, I would have to become hysterical about the 26 per cent. inflation rate that the Labour Government inflicted on the country when I originally came to the House. I shall start my remarks with a much more pleasurable task, which is to add my thanks and appreciation to the hon. Members for Paisley, North (Mrs. Adams) and for Paisley, South (Mr. McMaster). All hon. Members remember their maiden speeches, and the hon. Members for Paisley, North and for Paisley, South will remember theirs with pride, in particular the hon. Member for Paisley, North, who made an excellent speech in what must have been difficult personal circumstances. They are both to be congratulated.
If we had the procedure that applies in the United States Congress, I would read into the record a speech that I made in July last year which expressed some concern about our manufacturing base and our balance of trade. I would repeat the conversation that I had with the then Chancellor in 1988, which in turn would repeat the conversations that I had with the then Chancellor back in 1987 which covered my concern about the size of our manufacturing base and its effect on our balance of trade. In 1987, I was reassured by my right hon. Friend the Member for Blaby (Mr. Lawson), in his individual style, that I had very little to worry about. As the years went by, I found that his reassurances were becoming a little more hesitant. I share the view of the right hon. Member for Swansea, West (Mr. Williams) that we could be entering a stop-go cycle. That would be particularly damaging.
Undoubtedly, interest rates will come down as inflation comes down, but I want to make sure that our manufacturing base is able to take advantage of the upturn and not again start seeing foreign goods being sucked into our economy and once more back on the merry-go-round of stop-go. As a percentage of gross national product, our manufacturing investment is the lowest of the G7 countries. Is it a coincidence that the Japanese figure is 50 per cent. above the average of the other G7 members, bearing in mind Japan's balance of trade surplus and low inflation and interest rates? Manufacturing investment in this country has increased over the years, and that is to be welcomed, but it is now starting to tail off. In real terms, we have managed to reach the levels that were achieved in 1979.
On research and development, there is a somewhat similar picture. Those who are putting effort into research and development are doing quite well, especially the chemical and pharmaceutical industries. As a percentage of gross national product, our Government's research and development matches that of our major competitors. However, of the 0·7 per cent. of our gross national product, the majority is targeted at one aspect—defence activities. Again we must ask whether it is a coincidence that we have done so well in defence exports. The reason for it is that effort and expertise have been utilised.
Reductions in manufacturing investment and research and development lead me to the one point that worries me most, and that is the short-term attitude that seems to exist in many of our companies. We hear much talk about creating a level playing field. Japan and Germany have low interest rates, low inflation and low balance of trade surpluses. We would have difficulty in saying to them, "We want a level playing field. We want you to follow what we are doing." We do not have a level playing field. It is a battle field. If we can get it tilted in our favour, so much the better.
Japanese and German companies are able to take long-term investment decisions without fearing that a predator will take them over. They can accept PE ratios that just cannot be accepted in our market today. Who can recall the takeover of a Japanese company or a hostile takeover of a German company? If we examine the way in which their financial institutions invest in companies, we can see why they can offer security for the future. It is because there is close involvement. The continual pressure for higher and higher dividends to make sure that the pension funds or financial institutions keep away predators makes it exceedingly difficult for companies to adopt a long-term strategy for survival.
It was interesting that, during Back-Bench committee hearings earlier this year, two captains of industry, both duly dubbed for their services, spoke to us within a week of each other. The first agreed with the scenario that I am painting, but the second disagreed. I noted with a degree of irony that within two weeks of the meeting the second captain of industry was fighting like mad to hold back a predator who felt that, unbundled, the company in question would be more profitable.
We have a peculiar habit of treating the matter as though it were a game, whereas it should be recognised for what it is—a battle. I learnt a long time ago that a JCB could dig a trench quicker than a man with a shovel. We need manufacturing investment and research and development if we are stay ahead. Investment must take place if we are to increase the 22 or 23 per cent. GNP from our manufacturing base to 30 per cent. Again—coincidence or not—Germany and Japan manufacturing are giving greater percentages to their gross national product than ours. Is it a coincidence that the figure in Germany is about 30 per cent. and that in Japan it is 29 per cent.?
Let us see what practical things we can do. I do not want the Government to start trying to pick winners. My hon. Friend the Member for Gosport (Mr. Viggers) spoke eloquently about money going into industries. That is just the same as pouring it down the drain. I can remember the National Enterprise Board. The Government went out to pick winners, and that cost us millions of pounds.
We should try to ring-fence manufacturing investment and research and development so that it is not squeezed


out by dividends. In Germany the financial institutions hold so much equity that companies must be persuaded to pay dividends. If they do not pay them, they must pay corporation tax in excess of 50 per cent., but if they do the corporation tax drops down to about 35 per cent. We must encourage greater investment on the part of companies in manufacturing and research and development if we are to compete with our foreign competitors.
Our foreign competitors give much more support to aid and trade provisions. When Treasury Ministers consider such provisions, they should ignore the applications before them and ask to see the details relating to additionality. Revealing studies by some of our companies have shown the number of further contracts and follow-up work that has resulted from initial orders to justify the initial support. It is important to consider such additional business.
How has Germany achieved its economic miracle? It is largely due to the establishment of a series of business organisations—in particular, the German association of chambers of industry and commerce, known as DIHT. There are about 69 chambers in western Germany and they are responsible for the firms that produce about two thirds of Germany's gross national product. They work with 53 overseas chambers and together they represent 35,000 firms that account for two thirds of the German GNP. Membership of the chambers is compulsory, but that organisation is independent and gives a clear direction to the German Government on future policy. When we realise how well Germany is going in comparison to us, we would be stupid if we did not learn something from its practices.
Germany is a successful competitor because those chambers also provide counsel on training and skills. We are starting to learn from Germany in that respect, and I congratulate the Government on their efforts in training. The Government have done a marvellous job by setting up the training and enterprise council system. I am pleased to note that all 82 of the employer-led training councils will be up and running next year and that they will receive as much as 50 per cent. of the Department of Employment's budget. That money will give those councils greater flexibility and freedom to produce a supply of trained, skilled people.
Mention has already been made about how long it takes for someone to receive training. We must get away from the clockwork mouse syndrome. When a person leaves school, he is wound up with one piece of training for life and off he goes. We must recognise that that person might have three or four careers before retiring. We must ensure that flexible training is available to enable people to adapt to new careers as circumstances change.
I hope that TECs do not lose sight of small firms that are unable to spare management to become involved in the councils' activities. We must ensure that those small firms are not swept aside in the general programme.
The Government are absolutely right to drive down inflation, for if we do not conquer that we have nothing. I am worried, however, that once that is achieved British industry will be unable to take advantage. The Government must address that problem, otherwise we might end up with a stop-go cycle that will benefit no one.

Mr. William McKelvey: In common with all hon. Members who heard my hon. Friends the Members for Paisley, North (Mrs. Adams) and for Paisley, South (Mr. McMaster), I could not fail but to be moved by the sincerity and passion of their speeches. I hope that they retain that passion over the years. Sad to say, some of us have lost it, though not, of course, my hon. Friend the Member for Glasgow, Provan (Mr. Wray) who made a most passionate speech.
The Labour Benches are well attended by those of us who represent Scotland. I hope that the House will not mind if I refer to the transformation in the Scottish economy that has taken place, rather than macro-economic conditions as they affect Great Britain.
I always like to remind people that I came to the House in 1979—the year that the right hon. Member for Finchley (Mrs. Thatcher) was elected as Prime Minister. The decline that has been suffered in Kilmarnock since then has had more to do with the former Prime Minister than with the fact that I was elected to represent that constituency. So far, my constituents have believed that, and I do not believe that anything that has been said tonight will cause them to change their minds.
In the past 10 years the Scottish economy has transformed dramatically. No one would deny that, in the past, Scotland relied far too heavily on heavy, primary manufacturing industries. The changeover from those industries, however, has been dramatic and almost unbelievable.
Today, we are down to our last deep coal mine—I do not mean just in Ayrshire and the Kilmarnock district, but in the whole of Scotland. Ayrshire used to be famous for its mines and miners, but I do not believe that there is one working miner left in that county. I would not weep over the demise of the mining industry—that would keep men from digging in the bowels of the earth—if there had been alternative industrial employment. Sadly, because of their age, the vast majority of miners are unemployable. Now that they no longer even appear as part of the unemployment statistics, they have simply disappeared.
We are down to our last two shipyards in Scotland. Scotland was once the pride of the world for shipbuilding. Recently I visited Yarrows and I was extremely impressed at the skill and modernisation that has taken place there. Without doubt it is the most modern yard of its type in Europe, but, because of a lack of orders, 600 redundancies are imminent. If some of the orders in the pipeline do not materialise within the next 12 months, upwards of 1,200 redundancies will be issued from that ultra-modern shipyard.
My hon. Friend the Member for Paisley, South referred to the closure of Howdens, which was considered the creme de la creme of machine shops. It was opened with great pride and ceremony by the former Prime Minister to prove that Scotland had reasserted its competitiveness in world markets. That company has now gone. In a week it vanished off the face of the earth. We cannot help wondering what is in it for us in this new industrial era when the finest machine shop in Europe, if not the world, has closed. Its closure was not due to any lack of skill or ingenuity on the part of the work force or the local management. Unfortunately, that company was part of a multinational enterprise which does not consider the morality of its decision to dispose of a plant on site. It does


not consider what will happen to those people who have served that industry so well. There is not another steelworks in the world that has shown as much capacity to increase productivity as Ravenscraig. Unfortunately, it is to be disposed of.
The hon. Member for Hertfordshire, South-West (Mr. Page) asked whether there had ever been an example of a British industry taking over a foreign one. British Steel has taken over a German steel plant instead of investing adequately in plant in Scotland so that we could produce steel there. That can be put down to the malevolence of only one man—the chairman of British Steel, Bob Scholey, who warned the Select Committee six years ago that the Government had intervened against his wishes and that he would overturn their intervention at the first opportunity. So British Steel's decision had nothing to do with markets or profitability. It had to do with one man destroying an industry in Scotland. Scotland will not forgive him for that; neither will it forgive the Scottish Ministers who stood by wringing their hands and allowing it to happen.

Mr. Page: I do not want to disagree with the hon. Gentleman, but just for the record I referred to a takeover of a Japanese company and a hostile takeover of a German one. I fully accept that British Steel took over the German company, but that was with the willing support of the Germans.

Mr. McKelvey: It may have been with the agreement of the German Government, but I doubt whether the German workers willingly agreed to it. If British Steel pays the same wages in Germany as it pays here, the Germans may not be so happy about being taken over in the end.
The economy of Scotland, which was heavily dependent on industry, has been turned over. Like many hon. Members, I can offer a catalogue of disasters in my constituency. They are well documented, but it is perhaps worth repeating that we have lost major industries. The problem began with the decline and demise of Massey Ferguson, not because we could not produce the goods but because it was part of a multinational firm that believed that it could strike a better deal with France, so 1,800 jobs were wiped out in a week. It has already been said that small areas that depend on large firms can be devastated when those firms are removed. My constituency was certainly devastated by losing 1,800 jobs in three months.
The catalogue does not end there. Shanks and Company, which manufactured domestic sinks and baths, was bought out by Blue Circle. The Monopolies and Mergers Commission cleared the deal and said that it would be great for everyone, but one year later Blue Circle closed the company with the loss of 280 workers, who were thrown on the dole heap. Many of them were over 45 and are no longer recorded on the unemployment register, although they certainly do not have jobs in the Kilmarnock area.
BMK, a world-famous name in carpet manufacture, once employed 1,600 workers. It now employs about 230. I am grateful that we managed to save that industry. Mr. Logue, the man who bought it and who is now successfully finding overseas markets, demanded that the workers pay a price in return for saving their jobs. They were all sacked and brought back on new contracts, with smaller wages and worse working conditions. The pensions and holidays

that they once enjoyed were demolished. Their company was bought for a song on the backs of the workers and we should never forget that.
Despite this catalogue of industrial disasters, the extraordinary thing is that the economy in Kilmarnock picked up and was turned around. Even old-established firms such as the world famous Andrew Barclay locomotive manufacturing firm managed to turn around its economy because it invested in new machinery and training to produce the new locomotives needed for today. I was glad to hear the recent announcement that the firm —now part of Hunslett Barclay—won the Birmingham order for £82 million worth of new trains. The part of the order that will come to Kilmarnock will double the work force there in a matter of a year. All credit for that goes to Hunslett Barclay in Kilmarnock because it invested £4 million in new equipment and factory space to take on the order.
My constituency also boasts one of the safest industries in Scotland—the whisky bottling plant at Johnnie Walker, to which I am eternally grateful. The name Kilmarnock is printed on every bottle that goes out. Travelling the world I have found that no one has ever heard of Kilmarnock but every one has heard of Johnnie Walker, so I can make myself understood. The company has gone from strength to strength in an industry of which Scotland should be proud, because we have given the Chancellor countless millions of pounds in excise duties and billions of pounds in export revenues. We should all be glad that the new exclusive brands are bringing in much more money to Kilmarnock.
The depression is already starting to be felt in the south-east. I take no joy in telling Conservative Members that they have never known what unemployment might be like in their constituencies, or that their constituents have never known it. It is starting to bite now. I do not sympathise with Conservative Members, because the Conservative Government brought about the problem about which they are now complaining, but I have the greatest sympathy for workers who may find themselves without jobs in these difficult times. I do not know whether they will finish up in the same state as workers in the north, whom my hon. Friend the Member for Provan described. He said that many of our workers in Scotland have had to accept much lower wages than are paid in the south. Whereas in 1980 Scottish workers earned almost 99 per cent. of average pay in the south—this may be a reason why we have reversed the trend in the Scottish economy —male Scottish earnings are now below 93 per cent. of average United Kingdom earnings. Being prepared to accept lower wages perhaps means that we can still attract companies to invest in Scotland. It might even be argued that if we worked for nothing we would get all the investment that we needed—although British Steel would probably still not invest in Scotland.
Unemployment in Scotland is lower than it has been for some years. It reached its peak in 1987 and then started to fall. We are all glad of that, even though the figures have been doctored.
The textiles industry continues to decline, although it is extremely important to the Scottish economy. Textiles are usually produced in small firms spread among small villages and towns. Often, as in Kilmarnock and Loudoun and especially in the Irvine Valley, these firms are the only source of employment. If we cannot keep the multi-fibre arrangement going for a long time to come, we shall at a


stroke destroy the only livelihood of the people who work in these areas. Surprisingly, about 27 per cent. of workers in the Ayrshire area now depend on textiles for their employment. If we cannot extend the operation of the multi-fibre arrangement, we will wipe out not only those jobs but the whole economy of these extremely small but important areas.
Also important to the Scottish economy is the small farmer and especially the small hill farmer. I read with dismay that the Minister responsible for Scottish agriculture feels that small farmers are protesting too loudly about their possible demise. Many of them will go out of business because of the drastic reduction in their income this year. If the Government's attitude continues we shall return to lobby the Minister and he will face another demonstration such as the one that he saw recently when farmers came down to let the Government know about their precise difficulties.
The transformation of the Scottish economy has been a credit to management and workers who have accepted the kind of changes that were demanded. There have been extraordinary examples of workers and management working together to dispose of many of the old and outdated barriers that were between them and to create a partnership of success. As some hon. Members have said, many more companies now have a smaller number of production workers. It is important to listen to those people when they say that the recession is beginning to bite.
I am not an economist. The hon. Member for Beaconsfield (Mr. Smith) said that he was merely an accountant and not an economist. I doubt whether economics is in any way a science. I am a mere engineer, but I know that interest rates have had a dramatic effect on opportunities for small Scottish businesses. Those who have small businesses and those who hope to have them say that while the present level of interest rates remains there is no possibility of investing in new or updated plant and thus remaining or becoming uncompetitive. There must be an immediate cut in interest rates before the recession deepens.
The people of Scotland are usually tested as guinea pigs. We were the first to have the obnoxious, unwanted and unwarranted poll tax. The Under-Secretary of State for Scotland, the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton), has just entered the Chamber. That is excellent, because he can tell his colleagues that, whatever deal is done on the transformation of the poll tax—we hope that it will be abolished—and whatever arrangement is made to give rebates to people from whom money has been extracted, the Chancellor of the Exchequer should remember that the people of Scotland suffered this tax a year before anybody else. As a former trade union negotiator, I ask the Chancellor to ensure that when a settlement is reached the poor, hapless Scots get a year's back money.

Miss Emma Nicholson: I listened with care and thoughtfulness to the many excellent speeches, and in particular to the maiden speeches by the hon. Members for Paisley, North (Mrs. Adams) and for Paisley, South (Mr. McMaster), who have since left the Chamber. I add my tribute to the many that they have already earned from hon. Members.
I listened with care to the speech by the hon. Member for Glasgow, Provan (Mr. Wray). He made a thoughtful contribution about the difficulties facing his constituency. We all share his anguish about the high level of unemployment in his area. We wish that the jobs that he seeks for his constituents were immediately available. Despite listening carefully to the hon. Gentleman and to other Scottish Opposition Members, however, I still believe most sincerely and firmly, and with good evidence, that Government should allow business to operate freely.
The evidence of the years since the war is that Government manipulation and intervention creates distortions, postpones trouble and smudges decisions. At the risk of being as parochial as some Scottish Members, I must tell the House that British Shipbuilders in my constituency was running at a large loss until it was privatised. Now that the company is privatised as Appledore Shipbuilders and free of Government intervention, distortions and the smudging of decision making, it is operating at a profit.
It is not the task of Government to find jobs. It is the task of industry to create work and of people in those industries to make the jobs and invent the tasks that have to be carried out to fit the customer's needs. Perhaps I may tease Scottish Opposition Members even more by saying that the quality of life in Edinburgh tops the poll for the whole United Kingdom. The quality of life in Scotland as a whole, buttressed as it is by much Government intervention, is to be applauded.
The competitive position of Britain depends on businesses, which must seek the opportunities of 1992. Governments inevitably make mistakes but, fundamentally, Conservative policies are proven to be the best way forward and give the best framework for business and the economy. Eastern Europe alone confirms that socialism has lost. The command economy has gone. We have seen the end of Marxism and Leninism as theories of history and of economic muddle. We have seen an end to the division of Germany and the end of the Soviet empire in Europe and the Russian empire in the Soviet Union. We have seen the end of the homogenisation of the media.
All those successes are the successes of Europe as a whole and, in particular, of the political and economic policies of the United Kingdom. The United Kingdom must not lose confidence in its own efforts and fall prey to siren voices. We must not wait for the answers to be provided by someone else, by Government intervention and distortion. Such a course would drop us back into a sorry muddle and would be a return to the lack of vigour which has been too much of this country's history since the war.
Our essential aim must be to see that the policies and structures that we adopt enable our citizens to hold their own in global competition with the United States and Japan. To do that we must play a constructive part in the European debate, certainly focusing first on United Kingdom interests, but accepting that those interests will be best served by a vital, economic and energetic Europe in which we respect one another.
The motion exemplifies the muddled views and interventionist and manipulative policies that brought us to our knees a decade or more ago under a socialist Government. I often wonder at the continuing inaccuracy of Opposition thinking across the board. Despite the courteous words of the hon. Member for Kilmarnock and Loudoun (Mr. McKelvey) about hill farmers, the Labour


Front-Bench spokesman attacked farmers and said that they were too greedy. In that industry, incomes lag 30 per cent. behind the general development of the economy in Europe as a whole. The latest OECD report states that the same food package costs 25 per cent. less in Europe than in the United States of America, and that in the United Kingdom it costs 10 per cent. less again. Farming is a manufacturing industry, and one that is hugely successful. We have created a problem not of shortage but of surplus under Conservative and European policies.
Information technology, in which I have some expertise, is a vast success. I criticise deeply and accurately that part of the motion that calls upon the Government
to promote the modernisation of British industry through the application of new technologies".
Where have the Opposition been living in the past decade? The information technology world has had a growth rate of 20 per cent. compound in the past 19 years. It has had no recession since 1971, which was a year of plateau, and the current nosedive is created only by the delay in orders.

Mr. John Garrett: Why is it that Britain suffers a £.1·5 billion deficit in overseas trade in information technology equipment?

Miss Nicholson: I shall come on to that point in a moment, as I develop my thinking on information technology.
The Government, as an employer, leads the way in the IT world. We are negating this part of the motion, because we are computerising rapidly. Almost every Government Department one cares to name, from the health service onwards, is developing the use of modern technological equipment.
I said earlier that the delay in orders is responsible for the downturn in information technology. For example, military ovespend has meant that the new budget has been delayed until March of next year, and that is a large chunk of the information technology budget in both software and hardware. There is lagging in the City and a gradual lessening of business confidence, a trend that we need to turn round. The publication this week of the Massachusetts Institute of Technology report demonstr-ates the causal link between computerisation of business and the rise in profit.
Therefore, I am in no doubt that, once business confidence has been restored, computerised planning and the putting in of new systems in the wake of the findings of that splendid report, which contains much new thinking, will mark the beginning of an upward surge in the computer industry.
However, the very speed of growth in the information technology industry has meant some bad management of change and some implementation of bad systems. Here, I move on to training standards and the growing need for the heightening of them. Certification and common standards are crucial to the next stage of growth. That is an important international sector as well. I see the Government's task as setting the standards to which the industry must respond. Incidentally, we have only a 10 per cent. skills shortage in the United Kingdom, and that has come from the personal computer explosion, which requires a network of skills different from the earlier cluster required. Again, that is a problem of success.
We are now starting to achieve and certificate standards of competence through industry training investment, with Government assistance. Although I have the figures here, I shall not bore the House with them. Today, I was giving out the first ever computing practitioner awards. They have been planned since 1984, which shows how slow it is to get correct, agreed standards and certification. All the awards went to graduates, although they need not have done, and were given in conjunction with the National Council for Vocational Qualifications. This is in line with the Government's wish to have an employer-led national framework for all vocational training, which will encourage the orderly recruitment, training and certification of the United Kingdom work force. Last month saw the publication of a feasibility study into an industry training organisation for information technology, which I believe will lead the way.
The Labour party thinks that the answer to education is to intervene and restrict freedom of choice and, failing other ideas, to throw money at difficult problems. Its solutions often make things worse, as happened in the 1970s. The figures show that the Government have a long-term commitment to education and training, whereas the Labour party has too often thought of education as social engineering, and failed to put the education of each child or young person at the centre of its policies.
The Government are halting the decline of educational standards brought about by Labour policies—policies that militated against competition and choice. I see Labour Members shaking their heads, but I have only to point out that the Labour party has adopted as its policy disestablishment of the training education councils that we have set up and that are industry-led. The information technology training councils are even more important in this sector. That is nothing more than a destructive move, and one based on ideas that have in the past led to the formation of a highly regulated, low-aspiring comprehensive environment.
The Opposition cannot get away with implying that the Government lack commitment to education and training. More money can always be used, but it has to be spent wisely and effectively. The Government are strenuously tackling the fundamental issues, which are standards in both expectations and performance. Here, I urge the Government to encourage and use even more effort to ensure competition and choice. I stress competition, because I do not believe that ownership is the key to a free market. That is why I am not concerned that Japan is to buy a large share of ICL. One of our great weaknesses, and one of the reasons why we have not been competing effectively internationally in information technology, is that we need the sharpening of competition. Competition, not ownership, lies behind the concept of the free market. I should like the Government to use even more effort to ensure competition and choice in education—by, for example, the opting out of schools.
I reject the motion and warmly support the Government's amendment, because I strenuously believe that the free market philosophy, properly applied, is the only way forward for the United Kingdom. I urge my right hon. and hon. Friends to oppose the motion and to support the Government's amendment.

Mr. John McAllion: I join other hon. Members in congratulating my hon. Friends the Members for Paisley, North (Mrs. Adams) and for Paisley, South (Mr. McMaster). Their speeches were not only intelligent and effective but showed the passion and independence that make them worthy successors to those who served in their constituencies before them. If I have any wish for them, it is that in the years ahead the qualities that they have brought to the House will be used to change the House rather than that the dead hand of the House changes those qualities. That happens to far too many hon. Members. They become transformed and accept that reality is what happens inside the Chamber rather than outside in the world of our constituents, who do not have the opportunity to come here to speak for themselves.
The hon. Member for Torridge and Devon, West (Miss Nicholson) said that the quality of life in Scotland., and particularly in Edinburgh, was high and that this could be attributed to the Government's policies. She would have a hard time convincing the 10,000 homeless youngsters in Scotland or the 300,000 unemployed in Scotland that the quality of life is high there. She would have an even harder time convincing the 1 million-plus of Scots who live in poverty and on benefits and in damp and decaying housing that the quality of life in Scotland is high. I could take the hon. Lady to parts of Dundee and to parts of other cities in Scotland where the quality of life borders on that of people in the third world.
Direct responsibility for those conditions lies not with those who live in our cities but with the Government, whose policies over the past 11 years have deepened the economic recession and exacerbated poverty not only in Scotland but in the north of England, in Wales and in the heart of London itself. The Government have created two societies—a rich society and a poor society. The only sector of society for which they have shown any concern is the sector that has done well in the past 11 years. They have turned their heads away from the poverty that blights far too many millions of our people.

Miss Emma Nicholson: Just for the record, I took those figures from a national survey; they are not politically inspired. I would also point out that the quality of life in the north-east has been transformed under this Government.

Mr. McAllion: The hon. Lady has been out of the Chamber for the past few minutes. She has missed most of the points that I have made and I, therefore, propose to continue with my speech.
As the debate has shown, the deepening economic recession is not a figment of the Opposition's fevered imagination. It is now accepted as reality by many Conservative Members. The Chancellor himself used the memorable phrase to describe the recession, referring to it as "a marked slowdown". I am not sure that the Chancellor knows whether that slowdown is relatively shallow or relatively short or, indeed, exactly what "slowdown" means. But when a Tory Chancellor admits to a slowdown, we know that a real recession is taking place in the country at large.
Last month, when the Secretary of State for Scotland announced a small drop in unemployment in Scotland, he warned that rising unemployment in Scotland could not be ruled out as the economy slowed in the years ahead. He

knew very well that the recession that had already begun south of the border would soon spread north of it. Cabinet Ministers know much more about recessions than Labour Members. For a start, they have been responsible for far more of them than we have. They also have access to information to which we are not privy.
I have no doubt that, when the Secretary of State for Scotland spoke last month about rising unemployment, he already had access to information revealed today concerning British Rail's rail freight distribution division's decision to close down the speedlink service in Scotland from July next year. That will be a body blow to jobs and to the environment in Scotland. It is yet another crippling setback to Scotland's attempts to create transport links with Europe on the eve of the completion of the single integrated market. Given those circumstances, it is disgraceful that we should have had to wait four and a half hours for Scottish Office Ministers to appear. I can well understand why they have not been prepared to listen to the debate. No doubt they cannot even begin to defend the policies that have allowed such a catastrophic decision to be made. No doubt they will be here for a few brief minutes and will disappear again having made no contribution to the debate.
Just as disgraceful is the fact that the new Secretary of State for Transport, who had five years' experience as Secretary of State for Scotland—who knows our problems and understands the significance of the withdrawal of the speedlink service from Scotland—has not considered it worth his while to attend the debate or to justify his lack of activity and intervention which have allowed British Rail to go ahead and make the decision.
Let me concentrate on my area—Dundee and the north-east of Scotland. In recent years, we have had to face a catalogue of damaging decisions about our rail infrastructure. The first was the decision to close down the freightliner depots at Aberdeen and Dundee. Then came the decision not to electrify the east coast line north of Edinburgh, followed by the decision that our rail services should be fobbed off with second-best sprinters while investment in high-speed electrification elsewhere in the United Kingdom continued. We are now expected to bite the bullet and accept the closure of the speedlink services.
Given that Scotland is on the periphery of Europe and that the north-east of Scotland is on the periphery of Scotland, the decision will be a hammer blow to our economic prospects. Business and commerce in my area will now effectively be cut off from the European network and from enjoying access to European markets on the same basis as their competitors. We have been asked to settle for second best. We have had to settle for a promise that there will be an international freight depot somewhere deep in the heart of central Scotland—probably at Motherwell but in any case somewhere that is unconnected to the north-east of Scotland by rail freight links.
We must contrast that depressing scenario with the approaches of other European Governments and countries. France, for example, has recently decided to invest a further 100 million in its high-speed rail network, on top of the thousands of millions of pounds that it has already invested. France gets thousands of millions of pounds' worth of additional investment while the north-east of Scotland faces yet more cuts in investment in its railway infrastructure. How are we supposed to compete in the integrated market? How are we supposed. to fight our way out of the coming recession on the basis


of less investment and of infrastructure projects inferior to those elsewhere in Europe? The excuse trotted out for the closure by British Rail's rail freight distribution division is that half the volume and two thirds of the value of the freight traffic travelling on the speedlink service will now be transferred to other trains and services. That kind of argument may wash in the midlands where there are other services; it will not wash in the more remote parts of Scotland where there are no other services to which to transfer freight traffic.
The freight traffic in Scotland will have to be transferred to our roads, with serious implications for economic efficiency and growth in Scotland—especially for what Ministers like to refer to as "green growth". It has been calculated that the closure of the speedlink services will cause an additional 300,000 additional lorry movements on Scotland's roads every year. The lorries will be carrying chemicals, timber, fertilisers and other agricultural products. All of them will be spouting carbon emissions and they will make roads such as the A77 and the A9 even more dangerous than they are now. Will Scottish Office Ministers take this opportunity to tell us whether the possibility of an increased death toll on our roads ever figures in their calculations of economic efficiency and in their efforts to secure economic growth in Scotland? That is one of the realities that they will have to face. More people will die, there will be more pollution and Scotland will be less efficient as a result of the decision that the Government have allowed to go ahead.
The speedlink decision is even more depressing when one remembers that only last week the Secretary of State for Scotland came to the Dispatch Box and announced a £9 million cut in funding for Scotland's roads. It is an old story but it is worth remembering that, on his first day as Secretary of State for Transport, the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind) received more money than he was given to spend on Scottish roads in five years as Secretary of State for Scotland. He received £1 billion to create a 10-lane super highway to replace the M25. He never had anything like that amount to spend on Scotland's roads. I know that my hon. Friend the Member for Kilmarnock and Loudoun (Mr. McKelvey) and others will support me in my argument because they have campaigned for a long time for investment in the A77 and other roads in Scotland. The Government have persistently denied us that investment, yet here they are ready to spend much more money in the south because that is where they think most of the votes are.
The danger to Scotland's rail network goes even deeper than that. A succession of Ministers in both the old and the new Administration have washed their hands of British Steel's decision to push ahead with the closure of the Scottish steel industry. That will push 20,000 people into unemployment. A minimum of £200 million will be sucked out of the Scottish economy every year. Half the freight traffic and revenue generated by Ravenscraig and the steel industry will also be lost. As we know from today's speedlink decision, where business is lost, where profits disappear and where prospects for privatisation diminish on that scale, the service or industry concerned will quickly be lost as well. Scotland faces the prospect not only of the crushing loss of its steel industry but of the closure soon

afterwards of its whole freight rail network which will not be economically viable after the closure of the Scottish steel industry.
How can we rise to the challenge of the single market when we shall be disadvantaged not only compared with other European countries—all of which invest heavily in their transport infrastructure—but compared with other parts of the United Kingdom where freight services will survive, where electrification and investment will continue and where there will be a direct rail link with the rest of Europe? Scotland will have no such link, so how can it be expected to compete in the face of such a calamity?
As has already been said, this Government are one of the most profligate in recent history. They have received £80 billion in North sea oil revenues and many billions more from the proceeds of privatisation, but they have wasted almost all of that in private tax cuts in lining the pockets of the already rich. The Chancellor used one of his memorable phrases to describe the process—he called it the equal right to be unequal. That is exactly what the Government have been relentlessly pursuing. [Interruption.] Hon. Members may shake their heads; I also shook my head when I heard the Chancellor use that phrase, but that is what he said. To put it in simpler terms, it means the right of the rich to become richer and the right of the poor to be made poorer. That is what the Government have been about since they took office.
During the 1980s, the rich have had the party; in the 1990s, the poor will have to pick up the tab for that. The infrastructure has been neglected, the welfare state has been starved of investment and the American experience under Reagan—public squalor and private affluence at one and the same time—is being repeated in this country. That record is not good enough and the Government's time is up. Indeed, it was up a long time ago, and it was only because circumstances and luck combined that they were not defeated in 1983 and 1987.
It is time for a new era in British politics. It is time for decision making to be taken away from the House, because the House is largely unaccountable to most of the United Kingdom. In current circumstances, it is accountable only to the south-east and to nowhere else in this so-called United Kingdom.
It is time for a new political and constitutional settlement that will give Scotland a home-rule Parliament which can take charge of Scottish domestic affairs, including large parts of the Scottish economy. It is also time for the Welsh people to have the right to decide for themselves how they want their local economy to be run. It is time for the regions of England to be given powerful regional assemblies, so that they can regenerate the economies on which their people depend. For that to happen, there needs to be a Labour Government, and for that to happen, there needs to be a general election.
The Prime Minister and the present Cabinet were never elected to their offices and they have no right to hold office simply because of an internal Conservative party coup. That is no basis on which to rule a democratic society. They are living on borrowed time and sooner or later they will have to face the people of this country, who will then have a say in who should be placed in authority over them. I hope that it is sooner rather than later, because the sooner the Government go to the country, the sooner they will be defeated, the sooner there will be a Labour Government, and the sooner we can begin the fight back out of recession.

Mr. Martin M. Brandon-Bravo: I join hon. Members on both sides of the House in paying tribute to the two new Members of Parliament who made their maiden speeches tonight, the hon. Members for Paisley, North (Mrs. Adams) and for Paisley, South (Mr. McMaster). The hon. Lady's speech had an enviable fluency and content, and I have no doubt that she will make a major contribution to the House in coming years.
Every hon. Member who has spoken, with the exception of the two Front-Bench spokesmen, has distanced himself from the label "economist". I have no intention of seeking to compete with the professional financiers and those with degrees in economics. I speak as one of the few hon. Members—sadly, all too few—who are genuine manufacturers. One or two Scottish Labour Members have made an issue of manufacturing. My industry was textiles. Of course, that industry covers a multitude of sins. I survived in it for 30 years before coming to this House, 20 of them as production director and the last five as managing director of a company that I joined as a young man. Some may dispute this, but I venture to suggest that anyone who has survived for that long in textiles—the mass production end to boot—knows what recession, hard times and tough trading conditions are all about. No one in this House can give me a lesson on that.
I do not dispute that times are tough; it would be foolish to paint a different picture. However, I would not call it a recession in the sense that I understand the word. Technically, Britain may well have met the criteria that qualify it for that sad label, but I have seen much worse and with less good cause. It has righted itself before and it will do so again, provided that those with a vested interest and a compulsive attraction to failure are not allowed to talk the country into a problem that I believe is short term, that is viewed by much of industry as short term, and that, with a little thought and care, will be proved to be short term.
I accept that the current retail figures, which show a 1 per cent. drop probably—perhaps certainly—mean minus 20 per cent. for some industries and plus 19 per cent. for others. Of course, for industries on the wrong end at minus 20 per cent., it is painful and it probably means a recession, but only in that industry. Aggregate figures always cover a multitude of gains and losses. I accept that there is a problem for the domestic construction industry and related industries such as furnishings and fittings, but the figures do not show an overall recession. It will get worse, or fail quickly to right itself, only if the doom and gloom voices on the Opposition Benches are allowed to peddle their miserable wares.
I cannot deny that unemployment is rising, nor that there is an increase in company failures. However, those are more than offset by the number of start-up businesses, even in these difficult times. I am less than impressed by the claims of a lack of investment—a line that the Labour party has peddled for the eight years that I have been in this place. It has not been true at any period during those years, and it probably is not true now. Provided that a company is well managed and is not foolishly or wantonly overstretched, I know of no real investment decisions that have been scrapped simply because interest rates are two or three points higher than they were when that investment was initiated and evaluated. If the viability of an

investment was that tight, it was probably a bad or the wrong investment. If it was viable only with a Government grant, other than in very special circumstances we are entitled to question why the investment was made. I accept that investment, especially in a small company, may be delayed by the cash position of a company or by its ability to fund the necessary borrowing.
The ability to fund borrowing is the one issue that I want to address. Just as my experience gave me a feel for the limit to which any company should go without putting its existence at risk, so too must Britain and the Government have the will, skill and confidence to do what can safely be done—no more and no less—even if at the time it is less than popular.
Like most hon. Members, I regularly visit industrial companies in my area of Nottingham. There is no doubt that the small companies are watching the pennies, and they are right to do so. The small regular plant replacement is being delayed—not cancelled—just as a sensible precaution to ensure that cash and interest are within a small company's ability.
But the bigger companies—certainly the ones that. I have visited—have confidence. They are using the present tightness to strike good deals on major investment, and they will be there to take full advantage of the upturn when it comes. That confidence is well illustrated by the upbeat face of Nottingham and the east midland region, which has been the pattern during the past five or six years.
But our industrialists would not dream of following the airy-fairy approach of the Opposition, who in the latter part of their motion talk of Government spending untold billions on tired old socialist schemes, presumably to put our future in hock once again with borrowed money.
The Opposition, according to the motion, deplore Government policy. Let us look at one particular aspect. When the Government took over the shambles left by the socialist planners, the largest item of Government expenditure was not on health, education or defence, but interest—just interest on old debt. As my hon. Friend the Member for Horsham (Sir P. Hordern) said, it was then around 15 per cent. of the budget that the Government took over in 1979. Before the Chancellor could spend 1p on real public services, that debt interest had first to be paid. Then the old nationalised industries wanted their subsidies before any of the desired items on the list today even got a look in. That figure is now down to 5 per cent. —a massive reduction in the slice of cake that now goes on debt interest, a position which is envied in many countries.
The Opposition will no doubt argue that we could and should run a higher debt ratio. I disagree. I made two trips abroad during the summer recess. I was with an all-party group who visited America.

Mr. Oppenheim: Who paid?

Mr. Brandon-Bravo: The Americans paid for the air tickets. We were part of the Anglo-American all-party group.
We were there at the height of the political row over the United States federal budget. I recounted to my host the financial position that I have just outlined. His reaction was one of disbelief. I was asked what I thought the burden on the federal budget was, even without the current argument. To cut a long story short——

Mr. George Foulkes: Thank God for that.

Mr. Brandon-Bravo: The hon. Member for the Falklands and Jersey has only just come in and it would be helpful if he either left or joined in sensibly—preferably left.
To cut a long story short, 35 per cent. of the American federal budget goes on funding old debt. It was my turn to express disbelief. The question of what would happen if nobody wanted to fund that debt went unanswered.
I know that the American economy is a world apart from our own, but the concept of that level of debt confirmed my view that short-term pain was worth it if Britain avoided that slippery road back into debt—the kind of debt that we inherited in 1979.
Shortly after, I joined another group visiting Australia. This time it was the Commonwealth Parliamentary Association, so the Australians were paying. In the state of Victoria the local joke was, "What's the capital of Victoria? No, not Melbourne; one dollar." That resource-rich state is now running a debt that takes 22 per cent. of the state's budget; it is socialist controlled. If Opposition Members think that 22 per cent. of anyone's budget going just on interest is funny, heaven help Britain if they were ever on the Government Benches.
When we moved on to Canberra and asked about federal debt, we were told that that had risen to 18 per cent. That, too, is the result of a Labour Government and socialist thinking.
I am not an economist—

Mr. Foulkes: That is obvious.

Mr. Brandon Bravo: —but I can recognise financial incontinence when I see it, even verbal incontinence, so ably demonstrated by the hon. Member for Carrick and wherever.
I hope that those countries, for our sake and for their own people's sake, get their house in order and back on the rails. But it is the kind of road that I know the Government would never go along. We do not have the almost unlimited natural resources of those two countries, and that may be why they have let matters go that far. What we do have are our energies, our enterprise and our understanding of financial discipline—and understanding that may quietly be recognised by the shadow Chancellor, but not by the noisy Members behind him whom he would never be able to restrain if he ever had that responsibility.
Interest rates will fall when that is prudent, and trade will pick up as families' disposable incomes ease as mortgage payments fall in cash terms and as a portion of the family income. Better a little caution now than tears later.

Mr. John Garrett: I, too, offer my congratulations to the hon. Members for Paisley, North (Mrs. Adams) and for Paisley, South (Mr. McMaster) on their maiden speeches. Their predecessors were good parliamentarians. The previous hon. Member for Paisley, South was one of my best friends in the House or, for that matter, anywhere, and he will be much missed. Both the new hon. Members are worthy successors.
The Treasury forecast for the United Kingdom economy for the next 18 months shows a shallow recession and output growth resuming about the middle of next year. We heard that repeated today, although every time it is repeated it seems to be with somewhat less confidence.
During a session of the Treasury and Civil Service Select Committee and again today I asked the Chancellor what action he would take, if the recession were deeper and longer, as seems likely, to get us out of it. On both occasions I was not favoured with an answer, so perhaps whoever replies to the debate will have a shot at it for me.
We have heard that the reason for a recovery next mid-year or earlier will be a fall in inflation and the end of the current reduction in stock holding by industry. Industry will gain confidence early next year and rebuild its inventories, as it ought to at that stage of the cycle anyway, and as industry builds inventories, positive gross domestic product growth will resume.
The firms that are going out of business will not be rebuilding their stocks in the middle of next year, and plenty of them are going out of business. It is not at all clear why, with interest rates as they are, inventory rebuilding on a scale to take us out of a recession would take place at all. In other words, we get the rediscovery of the business cycle, and the business cycle taking care of itself. We are on automatic pilot. It is Adam Smith's hidden hand come back to take us out of a recession.
It is, however, difficult to share the Treasury's view of the depth of the recession which—as everyone now admits —we are already suffering. Real gross domestic product fell by 1 per cent. between the second and third quarters of 1990, and it is extremely likely to have fallen further between the third and fourth quarters. That is the definition of a recession: falling GDP in two successive quarters. We are told that it is the American definition. The Chancellor has described it simply as a rough time for industry, but in anyone's language that still amounts to a recession.
Non-oil output fell by 0·3 per cent. between the second and third quarters of this year. Even worse, all the most sensitive indicators of upcoming changes in the economy fell during the third quarter, and those that we have continue to fall during the fourth. That applies across the board: it applies to indicators of demand, such as the retail sales index, indicators of supply, such as the manufactur-ing output index and indicators relating to confidence, such as the CBI's business confidence survey.
The CBI forecast a much deeper recession than the Treasury. The CBI's figures show a decline of 1 per cent. in next year's GDP and a fall in investment of over 6 per cent., while the Treasury's show only a 2 per cent. fall in investment. Yet the CBI's figures are based on a direct survey of investment intentions in industry. There seems to be little justification for the belief in a self-reversing recession, and all the indicators suggest that this recession will be much deeper than the Treasury originally forecast, especially in the next two quarters.
There are several reasons for that. First, real disposable income is falling sharply, which has resulted in a deceleration of retail sales volume and consumer spending. Secondly, the economy can no longer rely on buoyant exports to counteract the effect of depressed domestic sales, because the United States economy is in recession —as is much of Europe, apart from Germany—and there has been virtually no growth in our exports since the early part of the year. Most significantly, however, companies are now reacting to the financial squeeze by cutting spending, and there has been a wave of redundancies across East Anglia, part of which I represent.
The new small firms in the south and east are the most vulnerable to recession, because they are so under-capitalised and have so few means of borrowing. Retail and construction firms—major employers and sources of economic development in those parts of the country—are particularly hard hit; the construction industry has virtually come to a full stop. It looks as though unemployment will rise, and by more than the Treasury's forecast. I expect it to rise by about half a million in the early part of next year.
We should bear it in mind that we are now supposed to be enjoying a "soft landing"—a fall in inflation and in our trade deficit, without a recession. Yet the forecast deficit on current account for 1991 of £11 billion—or 2 per cent. of GDP—constitutes no great fall in a recession year and suggests that the landing is likely to consist of a substantial impact with the runway. Manufacturing output, which was considered to be the key to the achievement of the "soft landing", has now been falling for five successive months.
What about the human side? Looking back on the past decade of economic management, The Guardian told us on 5 December:
Most people have more income at the end of the Thatcher years. Mr. and Mrs. Average are 23 per cent. better off. The rich are even more better off. But the income of the people at the bottom—the poorest 10 per cent.—has stood still ….
A 45-year-old trend has been reversed: their share of the national income has shrunk. And the group just above them is suffering too. Inequalities within the working population have spread to their widest point since records began in 1986.
On top of all that they have suffered in the past decade, the recession has hit the pensioners and the low paid hardest. Whatever the Government are remembered for, they will not be remembered for economic competence and their period of office is ending in a deep recession causing widespread hardship.
When we find our way out of the recession, where will our future growth come from? We now spend 3·9 per cent. of GDP on education, as against 4·5 per cent. in 1979. French, German and Japanese companies invest 2 per cent. of their turnover in training; British companies invest 0·15 per cent. While 85 per cent. of young Germans receive post-school training and education, one third of our young people do.
In a recession, a sensible Government would be expected to invest for the upturn. Recession gives us the opportunity at least to start to bring our training up to European standards. The present Government, however, continue constantly to cut the investment in human capital that is required if we are to be a successful, competitive nation. We are not investing in our human capital, and we shall pay a heavy price for that.

Mr. Phillip Oppenheim: It has been said —I forget exactly by whom—that, if we had entered the exchange rate mechanism in 1985, we would not now be suffering inflation and all would be well. It is worth pointing out that neither Japan nor Switzerland has been part of any sort of fixed-currency system, yet both have managed to keep inflation very low. It is also worth reminding those who express that view that it was the very fact that we were shadowing the deutschmark in May 1988—a policy that was, supposedly, a precursor of ERM entry —that caused us to cut interest rates at a crucial time, which cranked up the money supply precisely when what

we really needed was a rise in those rates. At the time, the former Prime Minister argued strongly against interest cuts, but effectively gave way to her Chancellor, who insisted on making the cuts to shadow the deutschmark.
The real problem of inflation has nothing to do with whether we were members of the ERM—not that I am against our membership; the real problem is that, in the mid and late 1980s, our money supply took off to a degree that the Government should not have allowed. In the mid 1980s, our money supply growth was no less than three times that of France. Therein lies something of an irony: the supposedly socialist President Mitterrand turned out to be far more of a monetarist than our own Prime Minister. It was tight monetary policy in countries such as France that caused them to experience lower inflation than we are experiencing now—along with much higher unemployment, however. Opposition Members should remember that.
Let me also remind Opposition Members that their part in this sorry saga of money supply growth was not exactly a happy one. Virtually at every instance they were urging us to cut interest rates. If we had followed their advice on every occasion, inflation would be very much worse than it is.
The real problem is that, for many years, our economy has been skewed far too much towards consumption. As a result, when we inflate the economy, too much of the money goes into consumption rather than production. It is, I think, increasingly recognised that one of the ways in which we can break out of that cycle of over-consumption is to boost savings. A country with a high savings ratio will tend to have a larger pool of capital available for industry, which will allow industry to look more to the long term. Supposedly our industry's outlook is at present too short term. There are many simplistic remedies, but I believe that a higher savings ratio is one of the valid ones.
Another advantage of that is that it tends to bear down on inflation. For some 130 years, Japan's policy has been to allow its citizens substantial tax-free savings accounts. The Japanese post office is now the largest savings institution in the world. Until recently every Japanese person was allowed to have a post office savings account completely tax free, to the tune of £20,000 a year. The Japanese equivalent of the Inland Revenue was not allowed to investigate any of the accounts. Therefore, the Japanese post office ended up with more savings accounts than there were Japanese citizens. The Japanese Government recognised the value of pushing up the savings rate in the economy.
Although we seem to have grasped that lesson, we still have a long way to go. I warmly welcome the fact that the former Chancellor of the Exchequer, now the Prime Minister, introduced TESSAs in the last Budget. However, as with the PEPs, they are a little complicated. They ought to be regarded just as a beginning. We must allow people to save, simply and efficiently, a substantial proportion of their capital tax free.
Although the Opposition sometimes pay lip service to the need to boost savings, their record when in government was not promising. They harmed savers by having significant negative interest rates. Therefore, anyone who saved money in a building society or bank lost out, compared with the rate of inflation. The Labour Government also cranked up taxes at all levels, especially for wealthy people who sometimes are able to save a lot of money. They imposed all kinds of penal tax surcharges. In


effect, that meant that it was far better for wealthy people to spend their money than to save it. I hope that the Opposition have learnt that lesson.
A lesson that the Opposition have not learnt is that simplistic interventionist strategies do not work. In his speech the shadow Chancellor of the Exchequer trotted out today the old line that all we need is what he called an industrial strategy. That has been tried before. How can the Opposition forget the sorry medley of companies and industries in the 1950s, the 1960s and the 1970s that were interfered and meddled with by politicians and subsidised in such a way that the economy was hopelessly distorted. It led to the productive and efficient sectors of our economy being drained of capital. One only has to look at the mess made by politicians and bureaucrats of our car and motor cycle industries and the power generation industry, particularly nuclear power generation. Billions of pounds and huge resources in terms of skilled men and scientists were poured into those industries.
Moreover, huge sums of money were wasted in investment in the steel industry. Decisions were made not with a view to arriving at the best commercial result, but on the basis of political expediency. Labour Governments were not the only ones to blame. One of the worst decisions ever made was by the Macmillan Government. They forced a private sector steel company to split its investment in a steel plant between Wales and Scotland. The investment was therefore far less efficient than it would otherwise have been. The steelworks at Ravenscraig were sited some way from deep-water ports and a very long way from the main markets. Politically inspired interference in industry has always been, and will always be, a complete disaster.
One reason, I believe, why the Opposition stick with their interventionist strategy is because they have completely misread the Japanese experience. It is far too easy for people to make simple excuses for Japan's success. One excuse is based on an all-powerful and all-seeing Ministry of International Trade and Industry that subsidises selected industries and surreptitiously pulls the strings of Japanese industry. But for many decades Government subsidies to Japanese industries—whether they be general subsidies or specific subsidies for research and development—have been far lower than those in the United States, Europe or Britain.
Two examples that are most frequently trotted out are the Japanese semi-conductor and computer industries. The subsidies that they received were minuscule compared with the overall investment that was made in those industries. They were also minuscule compared with the huge subsidies that we poured into companies such as ICL, that the Germans poured into Siemens and that the French poured into their computer national champion, Bull. They are minuscule too compared with the huge indirect subsidies that the American Government gave to their computer companies through tied defence contracts and other forms of indirect Government subsidy.

Mr. John Garrett: Was not the way in which until recently the Japanese Government protected their domestic industry from imports interventionist?

Mr. Oppenheim: I was coming to that later, but I will answer briefly now. It has been far too easy for western

industrialists to excuse their failure to penetrate the Japanese market by saying that everything is unfair because the Japanese subsidise their industries and MITI controls everything. There has also been a significant element of exaggeration when it comes to Japanese trade barriers. Many western companies have succeeded in the Japanese market during the last 20 years. If one asked business men and women such as Michael Perry of Unilever, who worked for a long time in Japan, they would say that more often than not trade barriers were given as an excuse for the failure of western business men to penetrate the Japanese market effectively. If the Japanese market is so protected, why is it that the Americans manage to sell more to Japan than they sell to Germany, France and Italy put together? We are the guilty party when it comes to trade barriers. Only a very few items in Europe or America are not now subject to some form of trade barrier.
The reasons for Japan's success have nothing to do with protectionism—which is not significantly worse than, and in recent years has been better than, the protectionism in the west—or with subsidies. All the World bank and Organisation for European Co-operation and Development reports show that Japan's subsidies to industry are significantly lower than ours. The reasons for the strength and vitality of the Japanese economy are more complex. One reason is that the Japanese economy is more geared towards production than ours. That is due in part to the high savings ratio. It facilitates investment and long-termism by industry.
Japan's education system is also rigorously geared towards the needs of industry. It produces highly literate people. Japanese schoolchildren also almost always come top when international comparisons are made of achievements in mathematics and science. It is not a narrow education. The Japanese education system produces people with wide interests. There are cultured products of that system. However, the Japanese are not ashamed or afraid to gear their education system to the needs of industry. They believe that the first responsibility of education is to enable people to earn their living.
It is fashionable for the Opposition now to say how important education is. I am glad that they have learnt that lesson. However, in areas where Labour controls the metropolitan and county councils and, therefore, the local education authorities, there is no evidence that Labour is making any effort to produce recruits for industry of the sort that industry needs.
Is is also worth remembering that until recently the Japanese spent far less per pupil than we do, yet they still produced better results. Just to pour money into education is not the answer. We must gear our education far more towards science, literacy and the other things that we need if we are to earn our way in the world.

Mr. Brandon-Bravo: To illustrate the point that my hon. Friend has just made, when the polytechnics were given their independence in April of this year they were no longer suffocated by the socialist control of our county council, with the result that a group of business men got together and our big polytechnic received £4 million of commercial money. The ethos that my hon. Friend has described in Japan is now possible in this country. That is possible only because we have given the polytechnics their independence; they are no longer under socialist control.

Mr. Oppenheim: My hon. Friend has made his point well.
I must not venture too far into education matters, for reasons that some of my hon. Friends understand. However, we on this side of the House know that we still have a long way to go if we are to improve our education system. It is a pity that the education reforms that we introduced in 1987 were not introduced much earlier during the period when my right hon. Friend the Member for Finchley (Mrs. Thatcher) was Prime Minister. If one reads books such as Corelli Barnett's "Audit of War", it is depressing to realise how long the lead time is in education. One can change the education system, but the benefits may not come through for another 10 or 20 years.
One other reason why the Japanese have been successful is that the Japanese Government have been low spenders. They have not followed the policy that we in Britain and other western countries have followed of spending money that we cannot afford. Many people recognise that, although the things on which the British Government spent money in the 1950s, 1960s and 1970s may have been worthwhile in principle, the real question is whether the economy could afford it. If the economy cannot afford such expenditure, the productive side of the economy will be drained of capital, and that is what we have done. On the other hand, the Japanese have spent strictly within their means and have maintained tight control of their public spending.
Another reason why the Japanese have been successful is that they have encouraged and inculcated pro-business attitudes. Opposition Members often criticise the performance of British industry and blame it on the Government, saying that we should be more pro-manufacturing. However, almost every successful business man or woman is derided by Opposition Members who do not seem able to come to terms with the fact that people who are successful in business make money. All too often "profit" is still considered to be a dirty word by Opposition Members.
Part of the interventionist industrial strategy solution is that the state should fund more research and development. I urge hon. Members to consider that proposition more carefully. There is no point in pouring either private or public sector money into R and D if the economy is not capable of turning that R and D into saleable products. We have been through all this before. This country has spent billions of pounds subsidising R and D, and not only in the military sector. I agree with my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) that R and D is skewed far too much towards the military sector of the economy. However, we have also spent R and D money on projects such as Concorde and System X, which have not been saleable products in world markets.
Until relatively recently the Japanese spent very little on research and development. They concentrated on buying licences from the west, on improving western technology, producing it efficiently and marketing it effectively. It is worth remembering that this country is still a net exporter of licences while the Japanese are still net importers of licences. Something must be wrong, and I do not think that it is R and D itself. We must accept that we must make our production efficient and get our marketing right. Then when we get back into the ranks of being a leading economy, more money can flow into R and D. If anything, we have put too many resources into R and D and we have

not seen the benefits because we have not been able to exploit the products in terms of production and marketing as well as other countries.

Mr. Page: Surely the problem is the different culture in the two economies. I agree with my hon. Friend that the Governments of both Japan and the United Kingdom give about 0·7 per cent. of their gross national product to research and development. However, the figure for Japanese industry is 2·2 per cent., whereas in Britain it is only 1·5 per cent. That means that the Japanese are spending between 45 and 50 per cent. more on R and D.

Mr. Oppenheim: My point is that that is a recent development. Until recently the Japanese spent far less on R and D, but now that Japan is the leading economy it spends more on R and D—for there is less technology to buy in the world market—[Interruption.] It is a case not of pinching but of buying in the technology. There is no harm in companies buying in licences. If more of our companies abandoned their "not made here" attitude and were prepared to buy in licences and to concentrate on improving those products, our economy might be more successful.
The Dutch electronics company Philips is a good example because no one can accuse that company of not spending money on R and D. Its R and D is excellent, but the company is in deep trouble. By contrast, for many years, Matsushita, the Japanese consumer electronics conglomerate, has bought in thousands of licences and has concentrated on improving those products, with the result that it is the world market leader in consumer electronics.
Philips is also a good example of how an industrial strategy can fail. No consumer electronics company in history has received more in subsidies from both the Dutch Government and the European Community than has Philips. No company has been more protected against takeovers and more protected by trade barriers, but Philips is still in the most appalling mess. The fact that the company has been protected against foreign competition must have some bearing on that, which brings me to my final point relating to trade.
Everyone is aware that the GATT talks are in crisis and that it was the attempt to include agriculture that led to the crisis. Most hon. Members will agree that the attempt to include agriculture, textiles, intellectual property and services in GATT is a positive move. However, that has tended to divert attention from a dangerous development in world trade. I refer to the growth of what are sometimes called "grey area" protectionist measures. They include unofficial or semi-official import quotas, which are sometimes laughably called "voluntary restraint agreements" or "voluntary export restraints". Those measures also include provisions which appear fair on the surface, such as anti-dumping duties, but which, because of the way in which European Community and American anti-dumping legislation is drawn up, result in huge dumping margins and huge penalties being imposed on East Asian manufacturers, even when they have not been dumping.
Few people realise the extent to which this has been going on. In America and Europe in the past 20 years, literally hundreds of product areas have been covered by quotas and import duties of one sort or another, or by anti-dumping duties. Almost everything is now covered,
from cars to steel, and from semi-conductors through to video recorders. Hardly a product is now not covered by some European Community protectionist measure.
As the case of Philips shows, not only does such protectionism not do industry very much good because it compounds inefficiency by reducing competition, but it also imposes significant burdens on consumers. The National Consumer Council recently estimated that, because of protectionist barriers to protect Philips and Thompson in Europe, British consumers pay 25 per cent. more for their video recorders than they need to do. However, it is not only the end consumer who suffers; industry itself suffers. The price of steel in Europe is 10 per cent. higher than the world price because of the trade barriers against non-EC steel. That impairs the efficiency of, among others, our car manufacturers. Semi-conductors are also heavily protected in Europe, which makes our computer industry less able to compete in world markets because it has to buy expensive European semi-conductors.
I have been deeply disappointed that in recent years our Government, who are supposedly committed to the free market, have not made a greater attempt at the European Community level to do something about those burgeoning trade barriers. If we are not careful, the world will break into three hostile trading blocs based around the United States or north America, east Asia and the European Community, and that will be dangerous.
We now have protectionism by stealth. In the 1920s and 1930s we had big bang protectionism, such as the Smoot Hawley tariffs, which led to a trade war that exacerbated the slump and the depression and significantly contributed to the increasing tensions of the 1930s. If we are not careful, we in Europe will start to go down the same slippery slope because, although we do not have big bang protectionist legislation, we now have protectionism by stealth.
The attitude of the Opposition is not encouraging. Labour Members are rightly ready to criticise huge subsidies and trade barriers in agriculture, but when it comes to textiles they want the multi-fibre arrangement to be strengthened and they completely ignore the damage that the MFA does to the developing world. According to many estimates, the cost of the MFA to the developing world far exceeds the aid given by western nations to developing countries.

Dame Elaine Kellett-Bowman: Will my hon. Friend give way?

Mr. Oppenheim: I hope that my hon. Friend will excuse me if I do not give way; I know that an Opposition Member wants to contribute to the debate.

Dame Elaine Kellett-Bowman: Will my hon. Friend give way?

Mr. Oppenheim: I hope that my hon. Friend will excuse me. I have only a minute more in which to speak, and I know that an Opposition Member wants to speak.
The right hon. and learned Member for Monklands, East (Mr. Smith) said that, over the past decade, Europe had overtaken Britain. That is not true. Germany overtook us in the 1950s, France did so in the 1960s and Italy was rapidly gaining on us in the 1970s. In the 1980s,

we have closed that gap somewhat. Manufacturing productivity grew faster in Britain than in any other country, and manufacturing output rose faster than in any other European country. It is also worth reminding the Opposition of one point. They often go on about manufacturing, and I agree that it is important, but when the Labour Government were in power, manufacturing output fell. Under this Government, it has increased by about one quarter.
All over the world, countries are following the type of policies pioneered by the Government in the 1980s. They are not nationalising industries; they are privatising. They are not regulating their economies; they are liberalising them. They are not pushing up public spending as a proportion of their overall gross national product; they are holding it steady or reducing it. They are not raising taxes; they are reducing them. The more sensible and intelligent Opposition Members are beginning to realise that. Looking at the series of sickening, dizzying U-turns in Labour policy over the past few years, even they have to admit in their heart of hearts that they have learnt some hard lessons during the past 11 years. For whatever The Guardian says, Thatcherism is not dead—rather it is just coming into its own.

9 pm

Dr. Jeremy Bray: We have had two notable speeches, by my hon. Friends the Members for Paisley, North (Mrs. Adams) and for Paisley, South (Mr. McMaster). Paisley plays a special part in the industrial and social life of Scotland, and it is now represented by two splendid new Members.
We have heard a memorable phrase used by the Chancellor—the right to be unequal—which will be echoed in the House for many months to come. We cannot let the talk of blips pass for ever. I am sure that the former Chancellor knew exactly what he was talking about when he said that inflation was just a blip. If a 5 per cent. rise in the retail prices index is just a blip, it means that real incomes fall by 5 per cent. Perhaps that is precisely what he was trying to do with the original VAT increase in the early 1980s and what the Government tried to do with the recent increase in interest rates. If money incomes follow the RPI up—as is happening now—it is not a blip, and the former Chancellor clearly understood that.
Undoubtedly—this is not difficult to forecast—there will be a fall in inflation because the rate jumped by 3 per cent. last April. When that figure falls off the end of the 12-month moving average as next April's figures are announced in May, inflation will miraculously fall by 3 per cent. But that will not be due to any forecasting skill by the Chancellor; we shall simply be reading the record of what has been published and known for a long time.
The overwhelming effect of the recession in Scotland has been the precipitation of British Steel's plans to close the Ravenscraig hot mill and the Clydesdale tube mill, with the loss of 2,000 jobs in prospect and the likelihood that, within a few years, we shall lose all steel production in Scotland. The arguments that we have pursued in Scotland on the future of steel making have been consistently based on economic grounds. That is what I shall do tonight, but in a wider context.
The hon. Member for Amber Valley (Mr. Oppenheim) brought out the old canard that Ravenscraig is not on a deep-water port. In fact, it is closer to a deeper water port


than are Scunthorpe and Llanwern. He said that it was further from its markets than other steelworks. In fact, it is as near its principal market of Shotton as is either Port Talbot or Llanwern. The hon. Gentleman's point is a total irrelevancy. He repeats simple slogans, the easy jargon of journalists who have never been north of Potters Bar. It is surprising to hear that from the hon. Gentleman.
The hon. Member for Amber Valley was nearer the mark when he started talking about research and development, but, again, his facts were wrong. He said that Japanese civil and industrial research and develop-ment was far lower than that of the United Kingdom years ago.

Mr. Oppenheim: I did not say years ago. I said, "until recently".

Dr. Bray: All right, until recently. In 1964 civil research and development in Japan was 1·3 per cent. of GDP compared with 1·5 per cent. in the United Kingdom—just slightly lower. By 1979 the Japanese figure had shot ahead. In other words, 11 years ago, Japanese research was 2·3 per cent. of GDP compared with our 1·7 per cent. Today Japanese civil research and development is 2·8 per cent. and rising whereas in the United Kingdom it is 1·8 per cent.

Mr. Page: Will the hon. Gentleman give way?

Dr. Bray: I am sorry, but I am pressed for time.
British Steel expenditure on research and development is £2 per tonne of steel produced. In a recent steel strategy document the European Community said that £3·5 per tonne was a reasonable EC target. The Japanese figure is £9 per tonne of steel. The hon. Gentleman will have read in the Financial Times yesterday an announcement that Kobe Steel is locating a new research and development laboratory. Where? In the United Kingdom. It is to study not steel research, but polymers and thin film diamond material to replace the next-but-one generation of semi-conductors. British Steel has abandoned all its basic research and does no research outside steel. What are the long-term prospects of British Steel surviving compared with those of Kobe Steel?
I want to address the main issue of tonight's debate, the recession. I join hon. Members who have looked forward and shall address three questions. First, what are the risks? Secondly, what can the public do? Thirdly, what can the Government do?
The underlying inflation problem is that there is no consensus on a sustainable income distribution, unlike that in less inflation prone countries, such as Germany, Austria and, in its better days, Sweden. The income distribution may be unequal, as in Germany and as the Chancellor of the Exchequer would prefer, or it may be more egalitarian, as in Austria and Sweden. So long as it is accepted, inflation is not a problem.
Inflation is not a problem in this country that we can correct by norms for wage increases or, in their modern version, Government assumptions about increases in pay in the public sector. Uniform wage increases leave the distribution of income unchanged. A group of wage earners left behind stays left behind. What happens, particularly in the public sector, is that eventually the, group gets so far behind that there is an outcry. The cry becomes, "Money on the table now." A big increase is

won. The rate lurches upwards, only to begin the long slide, establishing the saw tooth lurch and slide for another 10 years.
If attention were concentrated in time not on today's gap or differentials but on the average relativity over the past 10 years, a sustainable objective could be agreed for different groups of workers. Then talk could be about how fast that group could move towards the objective. For example, there is general agreement on both sides of the House that teachers' pay has fallen far behind. If the Government leave the problem too long, we shall have another Houghton. Teachers will be better off for a few years and wastage and recruitment will temporarily improve, but the profession will soon fall behind again. The see-saw is not in the interests of either teachers or the Government because it does not allow evidence to emerge on what pay is needed steadily to attract, retain and motivate teachers with the ability that parents expect.
The risk in the exchange rate mechanism is that in any move towards economic and monetary union people will not learn in time how radically the game has changed. The exchange rate will not be allowed to move to accommodate freely any faster rate of inflation in the domestic economy so that we can continue to sell our goods.
It has not yet sunk in that increases in the cost of living cannot be the basis of wage increases. Ministers have not had the courage to say that, because it means admitting that last year's pay was higher than we could afford. If Ministers will not say clearly that cost of living increases cannot be the basis of wage increases, how can ordinary people be expected to believe it?
It is because I believe that people can understand the problem that I am prepared to argue that we were right to enter the exchange rate mechanism, but Ministers have an awful amount of explaining yet to do. Most forecasters outside the Treasury have written in one realignment to correct for the level at which we entered the exchange rate mechanism. However, they then say that if there is more than one realignment, that will undermine the credibility of Britain's commitment to the ERM, which could extend by years uncertainty, risk and higher interest rates in the United Kingdom with damaging effects all round.
We on this side of the House have often made the valid point that there are other factors in inflation and other types of income besides wages. However, incomes from employment, self-employment and social security benefits account for 90 per cent. of personal incomes, leaving only 10 per cent. derived from rent, dividends and interest. Capital gains may be equal to as much again as 10 per cent. of personal income. So there should be no cop-out in blaming the speculators when we divide the cake. The biggest trouble in capital markets in recent years has come from the price of houses bought and sold by ordinary people.
There is a major issue in the distribution of incomes. The Government have indulged their prejudices too far and they are reaping, and will continue to reap, the consequences. If as a country we continue to fight over the issue, that will be the death of us as an industrial nation.
What can the Government do besides being frank with the people? Let me deal first with a slightly technical point. Entering the exchange rate mechanism will not abolish the difficult judgments that every Chancellor must make. For example, our present troubles began with the over-reaction to the stock market crash of October 1987 and


that could happen equally with exchange rates fixed within Europe. Treasury Ministers have often said that everyone at the time was demanding yet bigger cuts in interest rates.
In October 1987, shortly after the crash, I sent a paper to the Treasury and to the Select Committee on Treasury and Civil Service reporting an exercise on the Treasury model using the Treasury's own policy optimisation programmes on the data and models available at the time. The Economic Secretary to the Treasury will recall that I raised this issue in the House during a debate on an order a week or so ago.
The policy adjustments required on the Government's own priorities in response to the fall in the stock market were indeed a reduction in interest rates, but by less than 0·5 per cent. and for one year, and a reduction of income tax of 0·1 per cent., which was so small as to be effectively zero. The trouble was that the analysis of the situation before the stock market crash, on the data available at the time, was already calling for increases in interest rates and income tax, but the then Chancellor was not prepared to listen.
Today, the new Chancellor acknowledged that the United Kingdom at that time was already enjoying, as he put it, strong growth. The evidence was there in the Treasury that the growth was so strong that restrictions should have been taken in the economy in October before the stock market crash. I am sure that comparable analyses were given to the Chancellor by Treasury officials using the same methods of analysis at the time. It would have saved the Government, not to mention the country, a lot of anguish if he had listened.
Now, the London Business School and the National Institute of Economic and Social Research, as well as the Treasury, are using those policy optimisation methods. I doubt whether the Chancellor looks at the results. However, funds for research on the economic models and on the methods for using them are being cut by two thirds in the next academic year from £1·5 million a year to less than £0·5 million. It is typical of the stupidity and arrogance of Treasury Ministers that they think that they have nothing more to learn.
I now turn to the approach that Labour Members will take. I trust that we shall be more ready to learn than the present Government. I am sure that we shall be franker, too. We have been careful and disciplined in not making expenditure commitments and making it clear that we shall keep public expenditure within the limits of what the economy can afford at the time. However, as we approach the election—we have been quite clear about this point, too—the hardening of policies inevitably raises the general issue of public expenditure, taxation and disposable incomes.
There are two sources of change—shifts in shares of the cake as between disposable incomes, public expenditure and the role of taxation; and shifts from the growth of the cake. How quickly shares can be shifted depends on how much growth there is. There are three kinds of shifts—unconditional shifts, which we have limited to pensions and child benefit, short-term growth-generating shifts, which can contribute to growth within three to five years, and shifts that are conditional on growth.
Deeply and passionately though we are committed to increased resources for health and education, it is difficult

to argue that they can generate growth in the short term in the way in which, say, industrial investment and training can. It is a measure of our seriousness and readiness for government that that is being said as much or more by our health and education spokesmen as by our Treasury spokesmen. We are so determined to deliver real improvements in health and education that we will not wreck things by an undisciplined splurge. I do not think that the Government will get anywhere by looking in our direction for campaigning propaganda.
If the Government get the politics right, the arithmetic is relatively straightforward for a Government who are prepared to learn, listen to advice, and do not think that they know all the answers. The trouble with the Government is that they get neither the politics nor the arithmetic right because they thought that they knew all the answers. It is a tragedy that the nation is paying such a heavy price in the deepening recession today.

Mrs. Margaret Beckett: May I first send Opposition Members' sympathy to the new Chief Secretary to the Treasury, who I understand is flu-ridden and to whose debut on another occasion we look forward?
We have seen the debut of the new Chancellor of the Exchequer. I am sorry to say that it was, perhaps, a rather graceless debut by the right hon. Gentleman, and surprisingly so. It was not up to his usual high standard of courtesy. Perhaps he will do better another time when he is not so nervous. Despite the fact that the motion mentions recession, the Chancellor condemned my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) for not saying much about inflation, which the Chancellor said was the crucial issue of the economy and the only thing which really mattered. The Chancellor's words reminded me of an editorial in the Financial Times of 9 November which stated:
Inflation, the previous chancellor
that is, the right hon. Member for Blaby (Mr. Lawson)—
said, is 'judge and jury'. If so, the government is guilty of mismanagement and the Treasury of misforecasting.
Although the Chancellor argued that concentration on inflation should preclude discussion of the recession, the headline of that leading article was
The UK slides into recession.
We were a little surprised that the Chancellor wanted to talk about inflation, since the current level is 10·9 per cent. —we await the new inflation figures with interest. The average inflation rate for the other European Community countries is 5·9 per cent. and for ERM countries it is 4·4 per cent. That the Government preferred to talk about inflation is an indication of how much they did not want to talk about the recession.
Most Conservative Members slid over—no doubt they would prefer to say "rose above"—any discussion of recession. If they mentioned it, they did so in passing in the midst of great praise for Government policies. That was not true of the excellent speeches of my right hon. and hon. Friends, in particular two sparkling maiden speeches from my hon. Friends the Members for Paisley, South (Mr. McMaster) and for Paisley, North (Mrs. Adams). They spoke with far greater understanding of the reality of our economy than was evident in the speeches of Conservative Members.
Just a few days ago, I was talking to a group of business men in the south-east. They told me that it is more than a


year since they warned the Government that we were then, in their view and from their experience of business conditions at that time, approaching recession. All they got for their pains was a patronising little lecture on the folly and disloyalty of talking themselves into a recession. In fact, they were trying to talk themselves out of one by convincing the Government that there was a danger of a recession, in the hope that the Government might listen and change course. That was a year ago, but, judging from today's debate in December 1990, their message has still not got through.
It is important that we should place on record the true state of affairs, so that people outside, who must have been bewildered by much of today's debate, know that some of us, at least, are in touch with reality. In July 1990, a report appeared in The Guardian that contained a survey from KMPG Peat Marwick McClintock showing that the number of companies that have been placed into receivership had doubled. The same article contained a report by Dun and Bradstreet that business failures were at their highest level for 10 years.
I remind the House of reports in the Financial Times of 10 December that talked of the number of company failures being the "second highest on record" and added: bankruptcies may now be running at unprecedented levels.
The Financial Times also recorded the view of the Association of British Chambers of Commerce. On 26 November, the Confederation of British Industry warned not just of a recession, but of severe recession. On 30 November, Barclays bank said that trading conditions had deteriorated since the summer and that the problems extended to all aspects of its loans nationwide. On 4 December, the National Council of Building Material Producers referred to conditions already in severe decline, which it said were likely to become worse next year. The following day, Oxford Economic Forecasting spoke of a decline in engineering output and mechanical and electrical engineering. It also spoke of the dangers and problems of recession. Only yesterday, retailers produced figures to show the biggest slump for 10 years.
Let us dispose of the idea that it is only grudging people on the Labour Benches who believe that the economy is in recession. The Government have been reluctant to make that admission. Last year, in front of the Treasury and Civil Service Select Committee, the present Prime Minister, then Chancellor, was much more forthcoming. He was happy to give a definition of recession as a two-quarters decline in output. As the recession approached, however, the right hon. Gentleman's frankness receded. By October of this year he was admitting under pressure in the House that it was "conceivable" that there was a recession, although that was still not clear. He said that we would soon see, when the statistics were produced, whether there had been a recession.
By 8 November in the autumn statement the then Chancellor was sufficiently alarmed to get quite cross with my right hon. and learned Friend the Member for Monklands, East because he dared to mention the word recession. The right hon. Gentleman claimed that my right hon. and learned Friend used the words
in the way most calculated to alarm".
What a shocking thing to do! It conjured up
an image quite different from the reality of what is happening or is expected to happen in future."—[Official Report, 8 November 1990; Vol. 180, c. 125.]

The reports from which I have just quoted show who was really in touch with reality.
The Chancellor went on to talk about a period of "weak activity", which was as near as he could bring himself to using the word recession.
The present Chancellor, to give him credit, was prepared to tell the Select Committee last week that, although he would not go into definitions of recession, we were probably in one because, as he said,
Business, I know, is pretty rough for people at the moment.
I had the distinct impression today that the Chancellor had had his knuckles rapped, since he was not as forthcoming in today's debate.
The Government's attitude to recession seems to be that we should not talk about recession while we are on the way into it—as if the people who mention it are more to blame than those whose policies caused it. We cannot be absolutely sure that there is a recession while it is happening because we cannot get the figures until afterwards. We must not talk about recession while we are in the middle of one, therefore, and it does not take much foresight to guess what the Chancellor will say when recession starts to diminish: there is no need to talk about it now because it is over. There seems to be no stage at which it is acceptable to use the word recession.
Apart from the fact of recession, we have been anxious to hear from the Government why we are in one. We have heard much recycled material from previous debates, as well as the old excuse that the Government made just one little mistake in 1987 when they cut interest rates when everyone else, including the Opposition, said that they should. Governments across the world cut interest rates in 1987 because of the stock market crash. The Government say that that created inflation and that we had to have a recession, as the Chancellor said today, to squeeze out that inflation.
The Government always leave out of this explanation the fact that the 1987 cuts in interest rates were followed by the 1988 cuts in income tax. The Chancellor again argued today that they were of no significance. The Opposition disagree. We think that those income tax cuts added in a full year, as I recall, £6 billion to demand——

Mr. Norman Lamont: indicated dissent.

Mrs. Beckett: The Chancellor said about £3 billion; the lowest figure previously quoted was £4 billion. We shall let it pass—substantial sums were involved. Quite apart from them, a signal was sent by the tax cuts and by the rhetoric that accompanied them——

Mr. Tim Smith: rose——

Mrs. Beckett: The Opposition and the Government will never agree about whether any of this mattered, but there is evidence that the Government's claim that they did nothing wrong except for the 1987 cuts in interest rates is false. After all, it was not only the United Kingdom that cut interest rates. The other G7 countries did, too. So why are we in recession? What happened to the other countries that also made this 'one mistake, given that the Government do not admit that any of their other actions thereafter were a mistake?
Let us compare the inflation figures. Inflation is 10·9 per cent. here compared with 4 per cent. when we cut interest rates in 1987. The rate in Italy is 6·5 per cent., in Germany


3·1 per cent., and in France 3·8 per cent.—all higher than the percentages in 1987, but nothing like as high as our inflation.
Growth in France is up from 2·4 to 3 per cent.; in Germany it is up to 5 per cent.; in Italy it is down a little, but not by much. Here it is down to 0.5 per cent. and falling, because we are in recession.
As for the balance of payments, Germany has a bigger surplus now than in 1987. France is in much the same position, and Italy is slightly worse, but our balance of payments deficit had quadrupled as a proportion of gross domestic product, and we are alone in that. In October 1987, when the Government made that one mistake, we did not have the highest interest rates in Europe, but we have now.

Mr. Tim Smith: I do not know where all this is leading us. Most economic commentators accept that a too-lax monetary policy led to higher inflation. In 1988–89, after the 1988 Budget about which the hon. Lady expresses so much concern and in which tax rates were cut, we moved to a much tighter fiscal policy and had a very large public sector debt repayment.

Mrs. Beckett: As the hon. Gentleman knows, I am saying that the Government claim that the only mistake that they made was in 1987. The hon. Gentleman and I may disagree about the relevance of the different factors, but the Government say that nothing that they have done since 1987 has added to the problem. If they have not added to the problem, why is Britain the only country that is in recession?
The Government say that they made one mistake and the argument is about whether it led us to further problems. Since then, the Government have scored a series of inflationary own goals. Those were the increases in electricity and water charges in order to fatten those industries for privatisation; the increases in rents insisted on by the former Secretary of State for the Environment in order to make council rents competitive with those in the private sector; and increases in fares forced on the transport industry by Government policies. There has also been the imposition of the poll tax and, of course, the increases in interest rates. The Government have used interest rates, and interest rates alone, to resolve the problems that were being created.
We now have the consequences of a two-year squeeze to reduce the inflationary pressures in the economy that the Government had created. I should like to draw attention to two aspects of the consequences of that squeeze. Yesterday the National Westminster bank report drew attention to the bank's forecast that unemployment will rise by 700,000 over the next 18 months because of the severity of the recession. In the first half of 1990, more than 95,000 people had mortgage arrears of more than six months. Those people have serious debt problems as a result of the Government's policies. Not unrelated to that is the acknowledgement this week from the Government of the increase in homelessness. Some 72,830 households were officially accepted as homeless in the first six months of this year. Hon. Members know that the actual figure substantially exceeds the official figure.
Let us look at the future of the economy. In January the CBI said:

The danger that investment plans will be undermined by the high cost of capital, the squeeze on profits, and slower growth, is the most serious risk that the UK is facing at present".
That was in January and since then manufacturing investment is only 5 to 6 per cent. above the 1979 level from which it fell so catastrophically in the Government's first recession in the early 1980s. In the third quarter of this year manufacturing investment was 7 per cent. down on the same period last year, and manufacturing output fell by more than 1 per cent. in just one month towards the end of the summer. The very cuts in investment that cause most danger to our economy are taking place.
I should like to draw attention to correspondence that has been passing between the Government and the Machine Tool Technologies Association. In a letter, the association says:
it has become evident … that despite the claims of Government, investment in advanced technology by UK manufacturing has declined sharply since the beginning of this year.
It drew attention to the fact that export figures show that overseas manufacturers are investing in high technology, and that their exports have increased by 27 per cent. in the first nine months of the year. The association says that it believes that lack of investment in this country
is due to the lack of a favourable economic climate which would allow for large scale, long term investment in advanced technology. This is vital if we are to maintain a competitive productive capacity as a manufacturing nation.
The chairman of ICI recently pointed out that we shall not have economic growth for the next two years and that
this time, unlike in the Eighties, growth had to be based on 'solid industrial substance—not the shadow or 'fluff' of the second half of the Eighties, which has so swiftly evaporated in the current harsher economic climate'.
He was talking about the ridiculous effects of the Government's policies.
As my hon. Friend the Member for Norwich, South (Mr. Garrett) said, the Government talk of a potential soft landing, but it is more likely to be a nasty thump as we hit rock bottom and an ugly scraping as we are carried along into recession. The Labour party argues, although the Government contest it, that part of the reason for our problems is the way that the Government got their signals to the economy and the country wrong in 1978–88. They are doing it again. They claim that, in order to make a success of our membership of the exchange rate mechanism, there must be sacrifices, an understanding of how we have to become more competitive, and a willingness to rein back our demands. Therefore, to make a success of ERM, people have to understand that there may be difficult times ahead and we must make the right adjustments to ensure that our economy is competitive.
However, so that they can win the election, Conservative Members are already saying, as they will increasingly say, exactly the opposite—there is not really a problem, it is just another of those little blips so immortalised by the right hon. Member for Blaby. They claim that the problem is nearly over, it is just a short hiccup and soon everything will be all right. These messages are incompatible, as the well-being of the economy is incompatible, with the return of the Conservative party to government.
Perhaps what was most alarming about the Chancellor's speech was his reiteration that there will be no change in Government policy and that——

Sir William Clark: Will the hon. Lady give way?

Mrs. Beckett: The right hon. Member was not present throughout the debate and I have only three minutes left if I am not to cut into the Minister's time.
The alarming thing about the Chancellor's speech was that he said that there would be no change in Government policy and that it remained their objective to cut income tax further. He rounded his speech off with an extraordinary statement, to which a number of my hon. Friends have referred, and which will be the most remembered statement of the debate. It was that the Government believe in the equal right of everyone to be unequal. That will ring round cardboard city for many a month to come.
What was saddening about today's debate was the tone of it. There was nonsense about the Labour party having no policy and claims that the House had heard nothing. The reason for that is simple. The Labour party talks about promoting investment in education, about the need for investment in education and training and in research and development. Conservative Members do not think that is an economic policy. But let them say that to the Germans, French or Japanese. They will be thrown out on their ears and thought to be crazy.
Conservative Members may not have studied the papers carefully in the past week or so, so let me remind them that our economic proposals—the policy which they say does not exist—have been put through the Treasury model and there is evidence to suggest that we might produce rather better results than the present Government. So let us have no more of this childish, petty, silly suggestion that we have no policy.
If we want to build a world-class economy we must invest the national dividend in the nation's future. Despite what the Chancellor said, I hope that we shall hear from the Financial Secretary tonight that there will be no more tax cuts until we have the world-class economy and services that we need and deserve. We remember how, when the Chancellor was Chief Secretary, he told us that one often has to make a choice between public expenditure—public investment—and income tax cuts. We want to hear from the Financial Secretary that he recognises that the need of the country is for public investment and not for further income tax cuts.
My right hon. and learned Friend the Member for Monklands, East drew attention to the Chancellor's less than felicitious words about the Titanic. My hon. Friend the Member for Leeds, West (Mr. Battle) has reminded me of the poet who wrote that those with tinkling glasses were the last to notice that the Titanic was sinking. The first to notice were those below decks in the engine room who were trying to plug the holes.
If the economy is the Titanic, the Government are the orchestra, still playing the same old tunes. Despite those tunes, hundreds of thousands of our fellow citizens face a Christmas blighted by the fear or reality of the unemployment, bankruptcy and homelessness that accompany the recession brought about by the Government's policies. They will find neither comfort nor hope in the Chancellor's speech. For that, they need a Labour Government.

The Financial Secretary to the Treasury (Mr. Francis Maude): The debate started with two distinguished maiden speeches from the hon. Members for Paisley, North (Mrs. Adams) and for Paisley, South (Mr. McMaster). It must be exceptional—particularly in the middle of a Parliament —to have two new hon. Members from the same town, and they both distinguished themselves greatly. The hon. Member for Paisley, North spoke exceptionally movingly and eloquently. Like other hon. Members, I knew her late husband Allen and worked with him. We shared in the mysteries of the Whips' Office, serving on Committees arid so on. He had genuine friends on both sides of the House. We miss him, but we welcome her. Her speech lent lustre to the debate, and we look forward to hearing many more contributions from her.
The hon. Member for Paisley, South also distinguished himself in an exceptionally good speech—if I may say so as one who has also not been in the House for very long. It was most impressive and we look forward to hearing many more. The hon. Gentleman's predecessor, Norman Buchan, was a salutary reminder to us all that there is a life for politicians outside politics. That is something that we tend to forget.
Other than those two speeches, and save for some distinguished speeches from my hon. Friends—my hon. Friend the Member for Horsham (Sir P. Hordern), who cannot be here for the winding-up speeches, my right hon. Friend the Member for Hertfordshire, North (Mr. Stewart) and many others—we have had what one might call a quiet debate. That is somewhat surprising considering the vehemence of the Opposition's motion arid their apparent anxiety about the state of the economy.
We have made no bones about the fact that one of the causes of the present downturn in the economy is to be found in the measures that we have had to take to counter inflation. That illustrates the essential point, which we have been trying to din into the Labour party, with limited success, for years: the deadliest enemy of long-term growth and prosperity is inflation. The last Labour Prime Minister had it right when he said that inflation is the mother arid father of unemployment.
We have been clear and straightforward about the reasons why we have a problem with inflation at the moment. In 1987 and 1988, our monetary policy was not as tight as it should have been, for reasons which led to almost universal support for our policy at the time. We must be fair to the Labour party. It did not support our monetary policy at the time—not because it was too loose, but because it thought it was too tight.
Whatever the circumstances, the Opposition said that interest rates were still too high and that they should be lowered even more. We all remember them saying that; but, oddly enough, the Leader of the Opposition does not. We all think of things after the event that we would have liked to have said at the time, but would it not be more straightforward if the Leader of the Opposition were now to say that he has it wrong and that he was not saying, "Steady, steady?"
The Government have been straightforward and have accepted that mistakes were made. It would be nice if the Labour party could, just this once, bring itself to admit that, on the basis of what it said at the time, it would have doubled, redoubled and compounded those mistakes.

Dr. Bray: rose——

Mr. Maude: I am sorry, but I do not have the time to give way.
One of the most remarkable assertions made during the debate was made by the right hon. and learned Member for Monklands, East (Mr. Smith), who said that tax cuts fuelled the growth in demand. We were running a fiscal policy as tight as there had ever been in this country, and we had a budget surplus as large as any in the world. Some £14 billion of budget surplus was taken out of the economy.

Dr. Bray: rose——

Mr. Maude: No, I will not give way. I have only a limited time available and I must press on with my speech.

Mr. John Smith: rose——

Mr. Maude: I am sorry, but I will not give way. I must press on with my speech.
Demand having increased too much, we had to rein back by raising interest rates——

Mr. Smith: rose——

Mr. Maude: I am not giving way. I have only 14 minutes left, and I will not give way to the right hon. and learned Gentleman.
The Government had to rein back by increasing interest rates. That we did——

Mr. Smith: rose——

Mr. Maude: No.

Mr. David Winnick: On a point of order, Mr. Deputy Speaker. You have had long experience in the House. Is it the usual custom for a Minister to refuse to give way to the main Opposition spokesman? Is it not discourteous of the Minister——

Mr. Deputy Speaker (Mr. Harold Walker): Order. That is a matter for the Minister.

Mr. Maude: I have ended up with much less time to speak than the hon. Member for Derby, South (Mrs. Beckett) had, although I have rather more to say.
Interest rates have had to go up. It has been painful, but that process——

Mr. John Smith: rose——

Mr. Maude: No, I will not give way. The right hon. and learned Gentleman spoke at considerable length this afternoon, although he had nothing to say. I have only a short time to say rather a lot, and I propose to say it.

Mr. Smith: rose——

Mr. Maude: I can well understand why the right hon. and learned Gentleman does not want to listen to what I have to say, because what the Government say is the truth. I propose to get on with my speech and say it.

Mr. John Battle: On a point of order, Mr. Deputy Speaker. Under the rules of debate, the Government have the privilege of winding up. Surely the Opposition should be allowed to put questions to the Government——

Mr. Deputy Speaker: Order. I repeat that that is a matter for the hon. Member who has the floor, in this case the Minister.

Mr. Maude: Such bogus points of order make me even less inclined to give way——

Mr. Allen McKay: On a point of order, Mr. Deputy Speaker. The Minister referred personally to my right hon. and learned Friend the Member for Monklands, East (Mr. Smith). It is the convention of the House that an hon. Member who is referred to personally has a right to reply. This is an Opposition Supply day and we are discussing an Opposition motion——

Mr. Deputy Speaker: Order.

Mr. McKay: It is an Opposition——

Mr. Deputy Speaker: Order. The hon. Gentleman must resume his seat when I am on my feet. These are not points of order——

Several Hon. Members: rose——

Mr. Deputy Speaker: Order. The Minister is entitled to a hearing. The hon. Member for Derby, South (Mrs. Beckett) had a fair hearing, and I ask the House to give a fair hearing to the Minister.

Mr. Jimmy Hood: On a point of order, Mr. Speaker. You will remember that when the proceedings of the House were first televised one of the rules laid down was that if an hon. Member is mentioned——

Mr. Deputy Speaker: Order. These are bogus points of order. They are not matters for the Chair, and I very much hope that hon. Members will allow the Minister to resume his speech.

Mr. Hood: rose——

Mr. Deputy Speaker: Order. The hon. Gentleman knows perfectly well that these are not matters for the Chair, and they seem to be intended to disrupt the Minister's speech.

Mr. Hood: rose——

Mr. Deputy Speaker: Order. I shall call the Minister to resume his speech, and I hope that the House will give him an opportunity to address the House for the remainder of the debate.

Mr. Maude: This is an Opposition day, as it has been pointed out, and it is conspicuous that we have had two speeches from Opposition spokesmen who have had little to say. It is not particularly surprising that, when a Minister chooses to talk about Government policy, about the real world as it is, Opposition Members go in for organised barracking and bogus points of order to try to reduce the amount of time available to the Minister to tell the truth about what is happening.

Dr. Bray: Will the Minister give way?

Mr. Maude: No, I am sorry; I shall not give way.
It cannot be said too often that low inflation is an essential condition for sustained economic growth in the 1990s, and we shall do whatever is necessary to lower it. The present slowdown is bound to be painful. It is clear
that across a number of sectors demand in the economy is static or falling. But however much Opposition Members want it to be so, this is not a replay of the recession of 1980–81. Then output fell in five successive quarters and by 5 per cent. in total. Today we expect a fall in demand and in GDP between the two halves of this year with a recovery during 1991 as inflation recedes. That is confirmed by independent forecasters.
The reason for that difference is simple. In 1980–81 we had to pick up the pieces after years of drift, disorder and disillusion. Those were years in which inflation soared to 27 per cent. The British economy's growth rate was the worst in Europe. Investment hardly increased and the country was forced to beg from the International Monetary Fund.
Today there is a different story. Our problems have their source in too much confidence, not too little, in too fast a growth in investment, not too slow. The downturn is a necessary adjustment after a period of excessive and unsustainable demand.

Mr. Hood: Will the Minister give way?

Mr. Maude: No, I will not.
It means that we must learn better how to manage a dynamic economy. The Labour party's only task in power was to manage a declining economy.
In 1980–81 we had to pick the economy up by the scruff of its neck. After years of misdirection and neglect we had to begin to fashion the circumstances in which fundamental changes of attitude could take place. The 1980s were the only decade since the war in which we had an average growth rate higher than Germany and France, higher productivitity growth than Japan, living standards higher than ever, more shareholders, more home owners, more businesses, more people self-employed, 2 million more people in work, investment higher than it had been and a sustained period of fast growth and low inflation.
Some have argued that the currency should be depreciated to enable British exporters to compete. What rubbish. The great exporters of the 1980s, Germany and Japan, increased their exports dramatically at a time when their currencies were not depreciating but appreciating. The right hon. Member for Swansea, West (Mr. Williams) who claimed that somehow we should devalue is way off.
Some hon. Members—including, again, the right hon. Member for Swansea, West—derided the services sector, suggesting that we should not place too much emphasis on it. We should be clear about this: the jobs in that industry are real jobs, and form part of the real economy. Hon. Members should not sneer at the people who do those jobs; they are producing wealth for the country, and we should respect and support their work.

Several Hon. Members: rose——

Mr. Maude: Opposition Members do not support what is done by businesses. Labour talks about manufacturing industry as though it owned it——

Mr. Battle: Give way.

Mr. Speaker: Order.

Mr. Battle: The Minister will not give way.

Mr. Speaker: Order. I ask the House to listen to the debate in a parliamentary manner.

Mr. Maude: I suppose that at one stage the Labour party did own quite a lot of manufacturing industry, but, happily, most of it has now been liberated from state ownership into genuine public ownership, where it prospers and will continue to do so. British Steel, for instance, is now one of the most efficient and profitable steel producers in the world, with more than 10 per cent. of the European Community steel market—the second largest share. That is another classic case of abject failure under Labour being turned into shining success under the Conservatives.

Mr. Hood: Will the Minister give way?

Mr. Maude: No, I am not going to give way; I am going to carry on.
This has been an Opposition day, and an outside observer might have expected the Opposition to take the opportunity to tell us a little about their policies. I know that the hon. Member for Derby, South thinks it frightfully rude to talk about them, but she and the right hon. and learned Member for Monklands, East—

Mr. Hood: On a point of order, Mr. Speaker—

Mr. Speaker: Order. We do not know whether it is one yet.

Mr. Hood: On a point of order, Mr. Speaker. I am a relatively new Member, but, to my knowledge, this is the first time that a Front Bencher has refused to give way——

Mr. Speaker: Order. It is perfectly in order, and is frequently done.

Mr. Maude: Time and again, we waited for the right hon. and learned Member for Monklands, East and the hon. Member for Derby, South to tell us—[HON. MEMBERS: "Give way."] They have already had an hour and a half between them: they have had plenty of time in which to disclose to a wondering world what their policies are. Time and again we waited, poised to hear those policies; time and again, the wondering world was disappointed.
I am bound to say, however, that that demonstrates a modicum of wisdom on the part of the right hon. and learned Gentleman, and a difference, perhaps even a split —an important split—between him and the Leader of the Opposition. When the Leader of the Opposition—maybe I should say, "the Leader of the Opposition for the time being"—has nothing to say, he goes ahead and says it anyway; when the right hon. and learned Gentleman has nothing to say, he takes refuge in silence. "Don't watch my lips", one might call it.

Mr. Hood: On a point of order, Mr. Speaker. The Minister has again referred to a Member whom he has refused the opportunity to speak.

Mr. Speaker: Order. That is not a point of order. If the Minister will not give way, an hon. Member must resume his seat. I have not observed any Opposition Front Bencher trying to intervene.

Mr. Maude: I am endeavouring to be sympathetic to Opposition Front Benchers, because I understand that there is little that they can do. Their only policy was to recommend our joining the exchange rate mechanism. One can see the benefits to them of such a policy. It can be


summed up in three letters; as long as they got those letters in the right order, it was a memorable policy, and they could rely on their colleagues to mouth it again and again. Now that we have joined the ERM, however, they are left with nothing, and they are bewildered.
Labour's historic mission was to undermine and destroy capitalism, to destroy free enterprise. What Labour and its fellow practitioners across the world have achieved is destructive not of capitalism but of socialism. All round the world they are reading the funeral rites of socialism. Only here does the Labour party continue with its crusade.

Mr. Hood: Will the hon. Gentleman give way now?

Mr. Maude: No. Socialism is finished. Free enterprise works. In that lies our future.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 222, Noes 328.

Division No. 27]
[10 pm


AYES


Abbott, Ms Diane
Cunningham, Dr John


Adams, Mrs. Irene
Davies, Rt Hon Denzil (Llanelli)


Allen, Graham
Davies, Ron (Caerphilly)


Anderson, Donald
Davis, Terry (B'ham Hodge H'l)


Archer, Rt Hon Peter
Dewar, Donald


Armstrong, Hilary
Dixon, Don


Ashdown, Rt Hon Paddy
Dobson, Frank


Ashley, Rt Hon Jack
Doran, Frank


Barnes, Harry (Derbyshire NE)
Douglas, Dick


Barnes, Mrs Rosie (Greenwich)
Duffy, A. E. P.


Barron, Kevin
Dunwoody, Hon Mrs Gwyneth


Battle, John
Evans, John (St Helens N)


Beckett, Margaret
Ewing, Harry (Falkirk E)


Beith, A. J.
Ewing, Mrs Margaret (Moray)


Bell, Stuart
Fatchett, Derek


Bellotti, David
Faulds, Andrew


Benn, Rt Hon Tony
Field, Frank (Birkenhead)


Bennett, A. F. (D'nt'n &amp; R'dish)
Fields, Terry (L'pool B G'n)


Benton, Joseph
Fisher, Mark


Bermingham, Gerald
Flynn, Paul


Bidwell, Sydney
Foot, Rt Hon Michael


Blunkett, David
Foster, Derek


Boateng, Paul
Foulkes, George


Boyes, Roland
Fraser, John


Bradley, Keith
Fyfe, Maria


Bray, Dr Jeremy
Galbraith, Sam


Brown, Nicholas (Newcastle E)
Garrett, John (Norwich South)


Brown, Ron (Edinburgh Leith)
Garrett, Ted (Wallsend)


Bruce, Malcolm (Gordon)
George, Bruce


Buckley, George J.
Gilbert, Rt Hon Dr John


Caborn, Richard
Godman, Dr Norman A.


Callaghan, Jim
Golding, Mrs Llin


Campbell, Menzies (Fife NE)
Gordon, Mildred


Campbell-Savours, D. N.
Gould, Bryan


Canavan, Dennis
Graham, Thomas


Carlile, Alex (Mont'g)
Griffiths, Nigel (Edinburgh S)


Cartwright, John
Griffiths, Win (Bridgend)


Clark, Dr David (S Shields)
Grocott, Bruce


Clay, Bob
Hardy, Peter


Clelland, David
Harman, Ms Harriet


Clwyd, Mrs Ann
Haynes, Frank


Cohen, Harry
Henderson, Doug


Coleman, Donald
Hinchliffe, David


Cook, Robin (Livingston)
Hoey, Ms Kate (Vauxhall)


Corbett, Robin
Hogg, N. (C'nauld &amp; Kilsyth)


Corbyn, Jeremy
Home Robertson, John


Cousins, Jim
Hood, Jimmy


Cox, Tom
Howarth, George (Knowsley N)


Crowther, Stan
Howell, Rt Hon D. (S'heath)


Cryer, Bob
Howells, Geraint


Cunliffe, Lawrence
Howells, Dr. Kim (Pontypridd)





Hoyle, Doug
Patchett, Terry


Hughes, John (Coventry NE)
Pendry, Tom


Hughes, Robert (Aberdeen N)
Pike, Peter L.


Hughes, Roy (Newport E)
Powell, Ray (Ogmore)


Hughes, Simon (Southwark)
Prescott, John


Illsley, Eric
Quin, Ms Joyce


Ingram, Adam
Radice, Giles


Janner, Greville
Randall, Stuart


Jones, Barry (Alyn &amp; Deeside)
Rees, Rt Hon Merlyn


Jones, leuan (Ynys Môn)
Reid, Dr John


Jones, Martyn (Clwyd S W)
Richardson, Jo


Kaufman, Rt Hon Gerald
Robertson, George


Kennedy, Charles
Robinson, Geoffrey


Kinnock, Rt Hon Neil
Rogers, Allan


Kirkwood, Archy
Rooker, Jeff


Lamond, James
Rooney, Terence


Leadbitter, Ted
Ross, Ernie (Dundee W)


Leighton, Ron
Rowlands, Ted


Lestor, Joan (Eccles)
Ruddock, Joan


Lewis, Terry
Saimond, Alex


Litherland, Robert
Sedgemore, Brian


Livingstone, Ken
Sheerman, Barry


Livsey, Richard
Sheldon, Rt Hon Robert


Lloyd, Tony (Stretford)
Shore, Rt Hon Peter


Lofthouse, Geoffrey
Short, Clare


Loyden, Eddie
Skinner, Dennis


McAllion, John
Smith, Andrew (Oxford E)


McAvoy, Thomas
Smith, C. (Isl'ton &amp; F'bury)


McCartney, Ian
Smith, Rt Hon J. (Monk'ds E)


Macdonald, Calum A.
Smith, J. P. (Vale of Glam)


McFall, John
Snape, Peter


McKay, Allen (Barnsley West)
Soley, Clive


McKelvey, William
Spearing, Nigel


McLeish, Henry
Steel, Rt Hon Sir David


McNamara, Kevin
Steinberg, Gerry


McWilliam, John
Stott, Roger


Madden, Max
Strang, Gavin


Mahon, Mrs Alice
Straw, Jack


Marek, Dr John
Taylor, Mrs Ann (Dewsbury)


Marshall, David (Shettleston)
Taylor, Matthew (Truro)


Martin, Michael J. (Springburn)
Thomas, Dr Dafydd Elis


Martlew, Eric
Thompson, Jack (Wansbeck)


Maxton, John
Turner, Dennis


Meacher, Michael
Walley, Joan


Meale, Alan
Warden, Gareth (Gower)


Michael, Alun
Wareing, Robert N.


Michie, Bill (Sheffield Heeley)
Welsh, Andrew (Angus E)


Michie, Mrs Ray (Arg'l &amp; Bute)
Welsh, Michael (Doncaster N)


Mitchell, Austin (G't Grimsby)
Wigley, Dafydd


Moonie, Dr Lewis
Williams, Rt Hon Alan


Morgan, Rhodri
Williams, Alan W. (Carm'then)


Morley, Elliot
Wilson, Brian


Morris, Rt Hon A. (W'shawe)
Winnick, David


Morris, Rt Hon J. (Aberavon)
Wise, Mrs Audrey


Murphy, Paul
Worthington, Tony


Nellist, Dave
Wray, Jimmy


Oakes, Rt Hon Gordon
Young, David (Bolton SE)


O'Brien, William



O'Hara, Edward
Tellers for the Ayes:


O'Neill, Martin
Mr. Ken Eastham and


Orme, Rt Hon Stanley
Mr. Jimmy Dunnachie.


Parry, Robert





NOES


Adley, Robert
Banks, Robert (Harrogate)


Aitken, Jonathan
Batiste, Spencer


Alexander, Richard
Beaumont-Dark, Anthony


Alison, Rt Hon Michael
Bellingham, Henry


Allason, Rupert
Bendall, Vivian


Amery, Rt Hon Julian
Bennett, Nicholas (Pembroke)


Amess, David
Benyon, W.


Amos, Alan
Bevan, David Gilroy


Arbuthnot, James
Biffen, Rt Hon John


Arnold, Jacques (Gravesham)
Blackburn, Dr John G.


Ashby, David
Blaker, Rt Hon Sir Peter


Aspinwall, Jack
Body, Sir Richard


Atkins, Robert
Bonsor, Sir Nicholas


Atkinson, David
Boscawen, Hon Robert


Baker, Nicholas (Dorset N)
Boswell, Tim


Baldry, Tony
Bottomley, Peter






Bottomley, Mrs Virginia
Greenway, John (Ryedale)


Bowden, A (Brighton K'pto'n)
Gregory, Conal


Bowden, Gerald (Dulwich)
Griffiths, Peter (Portsmouth N)


Bowis, John
Grist, Ian


Boyson, Rt Hon Dr Sir Rhodes
Ground, Patrick


Brandon-Bravo, Martin
Grylls, Michael


Brazier, Julian
Gummer, Rt Hon John Selwyn


Bright, Graham
Hague, William


Brown, Michael (Brigg &amp; Cl't's)
Hamilton, Hon Archie (Epsom)


Browne, John (Winchester)
Hamilton, Neil (Tatton)


Bruce, Ian (Dorset South)
Hampson, Dr Keith


Buchanan-Smith, Rt Hon Alick
Hanley, Jeremy


Buck, Sir Antony
Hannam, John


Budgen, Nicholas
Hargreaves, A. (B'ham H'll Gr')


Burns, Simon
Hargreaves, Ken (Hyndburn)


Burt, Alistair
Harris, David


Butcher, John
Haselhurst, Alan


Butler, Chris
Hawkins, Christopher


Butterfill, John
Hayes, Jerry


Carlisle, John, (Luton N)
Hayward, Robert


Carlisle, Kenneth (Lincoln)
Heath, Rt Hon Edward


Carrington, Matthew
Heathcoat-Amory, David


Carttiss, Michael
Hicks, Mrs Maureen (Wolv' NE)


Cash, William
Hicks, Robert (Cornwall SE)


Chalker, Rt Hon Mrs Lynda
Higgins, Rt Hon Terence L.


Chapman, Sydney
Hill, James


Chope, Christopher
Hind, Kenneth


Churchill, Mr
Hogg, Hon Douglas (Gr'th'm)


Clark, Hon Alan (Plym'th S'n)
Holt, Richard


Clark, Dr Michael (Rochford)
Hordern, Sir Peter


Clark, Sir W. (Croydon S)
Howard, Rt Hon Michael


Clarke, Rt Hon K. (Rushcliffe)
Howarth, Alan (Strat'd-on-A)


Colvin, Michael
Howarth, G. (Cannock &amp; B'wd)


Conway, Derek
Howe, Rt Hon Sir Geoffrey


Coombs, Anthony (Wyre F'rest)
Howell, Ralph (North Norfolk)


Coombs, Simon (Swindon)
Hughes, Robert G. (Harrow W)


Cope, Rt Hon John
Hunt, David (Wirral W)


Cormack, Patrick
Hunt, Sir John (Ravensbourne)


Couchman, James
Hunter, Andrew


Cran, James
Hurd, Rt Hon Douglas


Currie, Mrs Edwina
Irvine, Michael


Davies, Q. (Stamf'd &amp; Spald'g)
Irving, Sir Charles


Davis, David (Boothferry)
Jack, Michael


Day, Stephen
Janman, Tim


Devlin, Tim
Jessel, Toby


Dickens, Geoffrey
Johnson Smith, Sir Geoffrey


Dorrell, Stephen
Jones, Gwilym (Cardiff N)


Douglas-Hamilton, Lord James
Jones, Robert B (Herts W)


Dover, Den
Jopling, Rt Hon Michael


Dunn, Bob
Kellett-Bowman, Dame Elaine


Durant, Tony
Key, Robert


Dykes, Hugh
Kilfedder, James


Eggar, Tim
King, Rt Hon Tom (Bridgwater)


Emery, Sir Peter
Kirkhope, Timothy


Evans, David (Welwyn Hatf'd)
Knapman, Roger


Evennett, David
Knight, Greg (Derby North)


Fallon, Michael
Knox, David


Favell, Tony
Lamont, Rt Hon Norman


Fenner, Dame Peggy
Lang, Ian


Fishburn, John Dudley
Latham, Michael


Fookes, Dame Janet
Lawrence, Ivan


Forman, Nigel
Lawson, Rt Hon Nigel


Forsyth, Michael (Stirling)
Lee, John (Pendle)


Forth, Eric
Lennox-Boyd, Hon Mark


Fowler, Rt Hon Sir Norman
Lester, Jim (Broxtowe)


Fox, Sir Marcus
Lilley, Peter


Franks, Cecil
Lloyd, Peter (Fareham)


Freeman, Roger
Luce, Rt Hon Richard


French, Douglas
Lyell, Rt Hon Sir Nicholas


Fry, Peter
McCrindle, Sir Robert


Gale, Roger
Macfarlane, Sir Neil


Gardiner, George
MacGregor, Rt Hon John


Garel-Jones, Tristan
MacKay, Andrew (E Berkshire)


Gill, Christopher
Maclean, David


Glyn, Dr Sir Alan
McLoughlin, Patrick


Goodhart, Sir Philip
McNair-Wilson, Sir Patrick


Goodlad, Alastair
Madel, David


Goodson-Wickes, Dr Charles
Major, Rt Hon John


Grant, Sir Anthony (CambsSW)
Malins, Humfrey


Greenway, Harry (Ealing N)
Mans, Keith





Maples, John
Shersby, Michael


Marland, Paul
Sims, Roger


Marlow, Tony
Skeet, Sir Trevor


Marshall, John (Hendon S)
Smith, Sir Dudley (Warwick)


Marshall, Sir Michael (Arundel)
Smith, Tim (Beaconsfield)


Martin, David (Portsmouth S)
Soames, Hon Nicholas


Mates, Michael
Speed, Keith


Maude, Hon Francis
Speller, Tony


Mawhinney, Dr Brian
Spicer, Sir Jim (Dorset W)


Maxwell-Hyslop, Robin
Spicer, Michael (S Worcs)


Mayhew, Rt Hon Sir Patrick
Squire, Robin


Meyer, Sir Anthony
Stanbrook, Ivor


Miller, Sir Hal
Stanley, Rt Hon Sir John


Miscampbell, Norman
Steen, Anthony


Mitchell, Andrew (Gedling)
Stern, Michael


Moate, Roger
Stevens, Lewis


Monro, Sir Hector
Stewart, Allan (Eastwood)


Montgomery, Sir Fergus
Stewart, Andy (Sherwood)


Morrison, Sir Charles
Stewart, Rt Hon Ian (Herts N)


Morrison, Rt Hon P (Chester)
Stokes, Sir John


Moss, Malcolm
Stradling Thomas, Sir John


Moynihan, Hon Colin
Sumberg, David


Mudd, David
Summerson, Hugo


Neale, Gerrard
Tapsell, Sir Peter


Nelson, Anthony
Taylor, Ian (Esher)


Neubert, Michael
Taylor, Teddy (S'end E)


Newton, Rt Hon Tony
Tebbit, Rt Hon Norman


Nicholls, Patrick
Temple-Morris, Peter


Nicholson, David (Taunton)
Thompson, D. (Calder Valley)


Nicholson, Emma (Devon West)
Thompson, Patrick (Norwich N)


Norris, Steve
Thorne, Neil


Onslow, Rt Hon Cranley
Thornton, Malcolm


Oppenheim, Phillip
Thurnham, Peter


Page, Richard
Townend, John (Bridlington)


Paice, James
Townsend, Cyril D. (B'heath)


Parkinson, Rt Hon Cecil
Tracey, Richard


Patnick, Irvine
Tredinnick, David


Patten, Rt Hon Chris (Bath)
Trippier, David


Patten, Rt Hon John
Trotter, Neville


Pawsey, James
Twinn, Dr Ian


Peacock, Mrs Elizabeth
Vaughan, Sir Gerard


Porter, Barry (Wirral S)
Viggers, Peter


Porter, David (Waveney)
Wakeham, Rt Hon John


Portillo, Michael
Waldegrave, Rt Hon William


Powell, William (Corby)
Walden, George


Price, Sir David
Walker, Rt Hon P. (W'cesfer;


Raffan, Keith
Waller, Gary


Raison, Rt Hon Timothy
Walters, Sir Dennis


Rathbone, Tim
Ward, John


Redwood, John
Wardle, Charles (Bexhill)


Renton, Rt Hon Tim
Warren, Kenneth


Rhodes James, Robert
Watts, John


Riddick, Graham
Wells, Bowen


Ridley, Rt Hon Nicholas
Wheeler, Sir John


Ridsdale, Sir Julian
Whitney, Ray


Rifkind, Rt Hon Malcolm
Widdecombe, Ann


Roberts, Sir Wyn (Conwy)
Wiggin, Jerry


Rost, Peter
Wilshire, David


Rowe, Andrew
Winterton, Mrs Ann


Rumbold, Mrs Angela
Winterton, Nicholas


Ryder, Richard
Wolfson, Mark


Sackville, Hon Tom
Wood, Timothy


Sayeed, Jonathan
Woodcock, Dr. Mike


Scott, Rt Hon Nicholas
Yeo, Tim


Shaw, David (Dover)
Young, Sir George (Acton)


Shaw, Sir Michael (Scarb')



Shelton, Sir William
Tellers for the Noes:


Shephard, Mrs G. (Norfolk SW)
Mr. David Lightbown and


Shepherd, Colin (Hereford)
Mr. John M. Taylor.


Shepherd, Richard (Aldridge)

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.

Mr. SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,


That this House congratulates Her Majesty's Government on the on the improvement in economic performance over the last 11 years and on its maintenance of tight monetary and fiscal policies necessary to reduce inflation which have been

reinforced by membership of the ERM; and notes that inflationary pressures are now easting as prelude to falling inflation and the resumption of sustainable growth.

Part-time Workers

Mr. Speaker: I ask hon. Members to leave the Chamber quietly if they are not remaining for this debate. I should announce to the House that I have selected the amendment in the name of the Leader of the Opposition.

The Parliamentary Under-Secretary of State for Employment (Mr. Eric Forth): I beg to move,
That this House takes note of European Community Documents Nos. 8072/90 and 9601/90 on non-standard work; and endorses the Government's view that, in the light of the 1·6 million new part-time jobs created in the United Kingdom since March 1983 and the overwhelming preference of part-time workers for part-time rather than full-time work, the Government should not accept proposals which would greatly increase the cost of employing part-time and temporary workers and would significantly reduce the number of jobs, thereby damaging the competitiveness of our industry, and that of the European Community.
I begin by apologising to the Scrutiny Committee for the fact that it has had very little time to consider the new explanatory memoranda on the revised versions of these directives. As I am sure hon. Members will appreciate, the new documents were received only at the end of last month, just in time for the Social Affairs Council on 26 November.
This debate is timely, as it allows me to outline the Government position in the run-up to the next Social Affairs Council on 18 December, where these three directives will again be considered.
The motion concerns three proposed directives which the European Commission published earlier this year as part of the social action programme to implement the social charter.
I should like to make a few general points which will, I hope, help to put this debate into context. The Government believe that what the Community does must pass the test of three criteria—those for Community action which were unanimously agreed at the Madrid European Council in June 1989. This implies looking at each Commission proposal on its merits and asking the following three questions. First, will the proposal encourage the creation of jobs for the people of Europe? Secondly, if the proposal passes this test, is action necessary at Community level? Finally, if such action is shown to be necessary, does the proposal respect the different national traditions and practices which exist in the Community?
The social action programme contains nearly 50 proposals which the Commission has committed itself to bringing forward by the end of next year. About half the proposals are for legally binding directives. That represents a significant volume of new regulation of employment and social affairs. Overall, we hope to be able to accept most of the Commission's proposals, especially on health and safety. Others pose great problems for the United Kingdom and at least two of the three directives referred to in the Government motion fall into that category.
Before getting on to the detail of the motion, I should like to say a word about our commitment to the European Community. The true criterion for commitment is the extent to which countries have implemented and put into

effect measures that the Community has already agreed. On that criterion, our record of commitment is outstanding.
Let me give some figures. Of the 107 measures due for implementation by March of this year under the single market programme, the United Kingdom had failed to implement only 18. That is an excellent record. There is a yawning gap between our performance and that of those at the bottom of the league. For example, Italy still must implement no fewer than 62 single market measures.
Our record in the social area is even better. At the last Social Affairs Council in November the Commission produced a report on implementation of existing EC social legislation throughout the Community. According to the Commission's own figures, the United Kingdom leads all other member states; and of the 18 existing directives in the social field, we are the only member state to have implemented all of them.
It is also worth looking at the extent to which countries take rapid action to comply with judgments of the European Court of Justice when legislation to enact measures approved by the Community is held to be deficient. We have only one judgment outstanding. Germany has 12 and Italy 37. Those are figures in which we can justifiably take pride. In my view, they are not sufficiently well known or understood, but they illustrate and underline our commitment to the Community.
The three draft directives referred to in the motion amount to a package of measures covering part-time and temporary work—what the Commission, rather unhappily, calls "atypical" or "non-standard" work.
The first directive deals with
certain employment relationships with regard to working conditions",
to use the Commission's wording. We normally refer to it for convenience as the article 100 directive, referring to the fact that the Commission has put it forward under article 100 of the treaty of Rome. The directive contains a large number of proposals governing the working conditions of part-time and temporary workers, excluding those who work an average of less than eight hours a week, but including temporary staff working through employment businesses and also those on fixed-term contracts.
The second directive concerns
certain employment relationships with regard to distortions of competition",
again to use the Commission's own wording. For convenience, we normally refer to that as the article 100A directive, to distinguish it from the other two, which are put forward on different legal bases. This draft directive contains a number of provisions intended to remove alleged distortions of competition caused by different rules in member states governing the employment of part-time and temporary workers. It is subject to the same exclusion and inclusion which I have just mentioned on the article 100 directive.
I say in parenthesis at this point that the Commission has produced no evidence to substantiate its allegations about "distortion of competition". Many part-timers are in fact employed in the non-trading sector where competitiveness is unlikely to be affected by differences in their treatment. Furthermore, any competitive distortion of this kind is insignificant compared with the much greater differences in labour costs resulting from differences in pay levels and overall social security provision.
Finally, the third draft directive deals with the health and safety of temporary workers.

Mr. Teddy Taylor: Before my hon. Friend the Minister moves on from the article 100A directive, can he tell us whether the Government believe that 100A is the appropriate article, bearing in mind that these very expensive and silly regulations can now be imposed on the United Kingdom, whether we like it or not? Do the Government accept article 100A? How can all this be happening when apparently we have not even signed the social charter?

Mr. Forth: As usual, my hon. Friend has made a telling point. Indeed we did not sign the social charter and this programme flows from it. We have taken to ourselves the right, as a member state, to examine each element in the programme on its merits and to apply to it the tests to which I have just referred to see whether the measures are appropriate or worthwhile. As I have said, we believe that some of the measures, particularly with regard to health and safety, are defensible and desirable and they will have our support. However, as I was about to say, we do not believe that the other measures on atypical work deserve our support, certainly not in their present form. The truth is that we do not accept that the legal base is sound and we have indicated our unhappiness and dissatisfaction about that. That is a cause of continuing discussion in the Council of Ministers. I hope that I can satisfy my hon. Friend more fully later in my speech, although I doubt it.
I was about to refer to the directive known in shorthand as the article 118A directive. I should make it clear at the outset that the Government support the principle of the article 118 directive on the health and safety of temporary workers. A broad measure of agreement has been reached in official discussions on this proposal. While some important points of detail still need to be resolved—for example, we need, in particular, to ensure a flexible requirement that does not impose unnecessary burdens on industry—I am sure that the Council of Ministers could move fairly quickly to a common position on this directive.
However, the other two draft directives pose great problems and are in our view misguided. Our view is that the Commission's proposals would greatly increase the costs of employing part-time and temporary workers. They would significantly reduce the number of jobs and thereby damage not only our industrial competitiveness, but that of the European Community as a whole.
It may help if I set the scene on part-time and temporary work in the Community as a whole before referring to the position in the United Kingdom.
Throughout Europe, employers are having to find new and more flexible forms of work to attract into jobs the peope whom they need for their businesses. The number of part-time and temporary jobs in the Community has grown rapidly in recent years, and there are now 14 million part-time employees, and 10 million temporary workers throughout the Community.
Community labour markets are extremely diverse. For example, part-time work is unusual in Italy, Portugal and Greece. But in Denmark, the Netherlands and the United Kingdom more than one in five jobs are part-time. As far as temporary workers are concerned, in some countries, such as Spain, Portugal and Greece, about one in five

employees are employed on a temporary basis. By contrast, in Italy, Belgium and the United Kingdom only about one in 20 jobs fall into that category. It is worth noting that in Italy temporary work is very strictly controlled.
But all the signs are that employers will need to create more flexible job opportunities in response to changes in industries and occupations and the nature of work itself. The demographic changes that are taking place throughout Europe mean that employers will increasingly need to take on women and older workers. Moreover, there will be increasing demand for part-time and other flexible opportunities.
What is the Commission's response to that? There is a clear signal in its description of part-time and temporary work as "non-standard" or "atypical". It appears to think of part-time and temporary work as in some way second-rate and unpopular with employees.
That is certainly not the experience of the United Kingdom. Nor does it square with the experience in other Community countries, where the unsatisfied demand for part-time work is such that there are many applications for every part-time vacancy advertised.
In the United Kingdom, almost a quarter of our employed work force is part-time—about 6·5 million people. Clearly, there is nothing "atypical" about part-time work here. Well over 1·5 million new part-time jobs have been created since 1983 and there is clear evidence that the demand for part-time jobs will continue to increase.
Moreover—this point is crucial—there is no doubt that part-time work is popular with employees in this country, as well as with employers. People who work part time in Britain do not think that they are second-best to those who work full time. They work part time because they want to.
The most recent labour force survey shows that fewer than one in 14 work part time because they cannot find a full-time job. Part-time work is particularly popular with women. Only 6 per cent. of women with part-time jobs took them because they could not find a full-time job. A survey commissioned by the CBI in the spring of 1990 showed that 80 per cent. of women in Britain who want to return to work in the next five years will be looking for part-time work.
The Commission's approach to part-time and temporary work would put at risk all those desirable developments. The effect of this proposal would clearly be to make part-time and temporary work more expensive for employers and more difficult for them to organise. There can be only one result of that—fewer opportunities for part-time work.
My Department's economists have estimated that the direct impact costs of the Commission's proposals to employers in the United Kingdom would be about £1 billion. The figure does not include the increased burden of regulation associated with the directives. Therefore, the implementation of those directives in the United Kingdom would imperil thousands of jobs.
The social security aspects of those proposals would also have a direct effect on the pay of many employees. For those 1·75 million employees in Britain who work part time and earn less than £46 per week, the proposals would actually have the effect of reducing their take-home pay by making them liable to pay national insurance contribu-ions for the first time.
We are not alone in our views. Unlike most other member states, we consulted widely on the Commission's proposals. Almost every response from United Kingdom employers saw the potential in the proposals for costs to increase and the inevitable consequences for their ability to create jobs.
The general approach of the Government to these matters is to encourage employers to create part-time and flexible job opportunities. That is good for efficiency and it is what gives choice to employees. It means avoiding the unnecessary regulation of employment, which would add to employers' costs and make it harder for them to create jobs, while maintaining a strong framework of essential employment protection.

Mrs. Audrey Wise: The Minister mentioned consultation and employers. Who else did he consult? Specifically, did he consult trade unions?

Mr. Forth: Yes, indeed. We consulted several hundred organisations and companies and undertakings. Overwhelmingly, the response from employers who create wealth and provide job opportunities was hostile to the directives.
Perhaps surprisingly, the trade unions generally support the measures. That confirms my long-held belief that the trade unions are no longer interested in employment and jobs. They might be interested in providing misguided protection for those relatively few of their members who are left, but they are not interested in providing increased job opportunities for people who tend not to be trade union members. The response from the trade unions is revealing and damaging.

Mr. Tony Lloyd: Given that the Institute of Personnel Management has made the same kind of welcoming noises to the directives, does the Minister also believe that that institute is not interested in employment and jobs?

Mr. Forth: The hon. Gentleman is wrong. The institute welcomed some elements of the directives, but, equally, it thought that some others would be damaging. I think that it would be fair to characterise its response as somewhat mixed. Although the hon. Gentleman is entitled to take a selective view of what one body said——

Mr. Paul Flynn: The Minister is also being selective.

Mr. Forth: I did not mention the Institute of Personnel Management; I am simply responding to the question. I want to ensure that the House is not misguided by what the hon. Member for Stretford (Mr. Lloyd) said.

Mr. Tim Janman: My hon. Friend has rightly described how the British Government have consulted with employers and paid heed to their valuable contribution. It might be more positive if the Governments of Germany and Portugal took more note of what their employers have said. The Select Committee on Employment recently visited those countries and we were pleasantly surprised at the degree of scepticism and, in some instances, the sheer opposition of employers' organisations to the directives issued as a result of the social charter. They are are opposed for the very reasons that my hon. Friend has expertly advanced tonight.

Mr Forth: My hon. Friend has made an important and striking point.
Although we make efforts to consult widely on such matters—such efforts are also made by other Departments such as the Department of Trade and Industry—it is noticeable that most of the other member states do not have the mechanism, or the will, so to consult. That explains why politicians from the continent can come to the Council of Ministers and support such measures, which can damage employment prospects. Apparently they are unwilling to acknowledge those potentially damaging effects because they have failed to consult their employers—their wealth creators—or other represen-tatives. That is damaging not only to those member states, but to the Community.

Mr. William Cash: rose——

Mr. Forth: I gladly give way to the newly elected chairman of the Back-Bench European affairs committee.

Mr. Cash: Does my hon. Friend agree that one of the problems is that the other EC member states do not scrutinise the legislation properly? Although we may have to improve our methods of scrutiny, those countries have an absolute requirement to do so. Many things are not sorted out at the appropriate level in the Community because other member states do not go through the stuff in the right manner, while we are trying to do it even better.

Mr. Forth: That is correct.
Often measures before the Council of Ministers have hardly been scrutinised in the sense that the House would understand the meaning of that word. Often we have to force other countries to undertake such scrutiny and that leads to allegations of unhelpfulness, when the reverse is true. We are trying to make things workable and effective, but our attempts are often misconstrued as being negative.

Mr. John Butterfill: Is not it true that the Italian president of the Social Affairs Council, Sr. Donat Cattin, admitted that people did not realise what they had signed up to under the social charter?

Mr. Forth: My hon. Friend has demonstrated his usual perception.
The presidency has been disappointed to note that, now that we have got to the detail behind the measures contained in the social action programme, many member states that had rushed quickly to sign up to the social charter are now beginning to wonder whether those measures are what they bargained for. That explains the change in attitude in the Council of Ministers as we reach the later stages of the development of the social action programme.

Mr. Flynn: I hate to interrupt the chorus of self-adulation among Conservative Members, but I must point out that the Government are highly selective in the way that they treat the representations that they receive. They recently consulted on statutory sick pay. Every trade union and organisation of employees and of employers said that it was opposed to the changes in SSP, because they would rob industry of jobs and hence of its ability to employ people. The Government wholly ignored that consultation, yet tonight they pretend to be responding to consultation. When they disagree with the results of consultation, they ignore it.

Mr. Forth: The hon. Gentleman is entitled to his own interpretation. I was not responsible for the DSS consultation on SSP, but I am sure that it was comprehensive and detailed. In my experience, once changes of the sort mentioned by the hon. Gentleman have been carefully explained to those affected by them, they see them in a more positive light. I have found when dealing with small business, for which I am responsible, that, once people have the true nature of the changes explained to them, they respond more positively. That gives the lie to the hon. Gentleman's suggestion. But as we are not debating statutory sick pay this evening, I do not want to use up any more time——

Mr. Flynn: rose——

Mr. Forth: I really must get on. The hon. Gentleman has introduced a red herring to the debate, and we should now allow it to rest.
The Commission's proposals on part-time and temporary work deal with matters that are best left to individual member states to decide. In other words, the proposals offend against the Commission's own principle of subsidiarity—the principle that action should not be taken at Community level unless the objective can be achieved only by action at that level; and that such action should go no further than is necessary to achieve the objective.
The proposals are costly. They are unnecessary. They are also counter-productive because they would harm the interests of the very people whom they seek to protect. The result would be a loss of jobs throughout the Community.
The effect on employers would be equally disastrous. They would face restrictions on their ability to organise and to afford the flexible working patterns that they and their employees need. At the same time, businesses throughout the European Community must continue to compete with businesses in countries such as the United States of America and Japan, to say nothing of the newly industrialised countries, which do not have similar restrictions. It is significant that in the 15 years between 1973 and 1988 total employment in the Community grew by only 5 per cent. Over the same period employment in the United States of America grew by 35 per cent.
The Commission takes no notice of all this. It has not even entered its head. For example, it is astonishing that it has put forward its proposals without making any assessment of the impact that the proposals would have on employers' costs and on jobs in the Community.
It is often suggested that we are on our own in having doubts about the Commission's proposals on part-time and temporary work. That is quite wrong. It was clear from the last meeting of the Social Affairs Council on 26 November—my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) made this point—that other member states shared a number of the United Kingdom's doubts and reservations about the Commission's proposals, both on the legal base and on the substance. That Council meeting showed that when the Community gets down to discussing the reality of actual proposals, our priorities and our concerns are shared widely throughout the rest of the Community. I welcome the realism and pragmatism of that approach.
We will continue to challenge the need for these directives, while playing a full and constructive part in discussions on them. During the negotiations we will urge

our Community partners to ensure that whatever we do at Community level will help, instead of hinder, employers in every Community country to create the part-time and other job opportunities which the people of Europe want and which employers need.

Mr. Teddy Taylor: Will the Minister give way? He promised to answer a specific point.

Mr. Forth: indicated dissent.

Mr. Taylor: Will the Minister give way?

Mr. Deputy Speaker (Sir Paul Dean): Order. Is the Minister giving way?

Mr. Forth: No.

Mr. Taylor: That is unfair.

Mr. Tony Lloyd: I beg to move, as an amendment to the motion, to leave out from "work" to the end of the Question, and to insert instead thereof:
recognises the significant increase in the numbers and proportion of people in the United Kingdom labour force engaged in part-time and temporary work; is aware that many people, including a high percentage of women workers, rely on such work in the absence of full-time employment or to fit in with other demands on their time; is conscious of the important economic contribution of such workers; believes that measures designed to put the working conditions of such people on the same footing as full-time employees is in itself socially desirable and would reduce any artificial incentive for employers to create part-time rather than full-time work.".
I shall leave Conservative Members to continue their internal row while the Opposition continue to speak for the interests of the nation and for the interests of those people, mainly women, who are engaged in part-time work. I am pleased to be accompanied by the Opposition spokesman on women's issues, my hon. Friend the Member for Barking (Ms. Richardson). I contrast that with the attitude of the Prime Minister, who failed to appoint a woman to his Cabinet.
We are debating the social charter, about which the Minister and his hon. Friends have become quite excited. The debate is important because, as the Minister has said, it is the first debate on the substance of the social charter. It is a great shame that Conservative Members talk about consultation and the demerits of Europe's devious Foreign Ministers. The Council of Ministers had already met to discuss the directives before the House had an opportunity to debate them.
The Minister shows contempt for our democratic processes by complaining about consultation by other bodies, when it is obvious that the Government did not make a meaningful attempt to bring about consultation. Conservative Members who read the Government's consultation document might be surprised to find that the Government's consultation offer was couched in a way that would lead a casual reader to conclusions warranted only by the premises in that so-called consultation document. It answered its own questions, and as an exercise in consultation it was nothing more than a hollow joke.

Mr. Janman: Will the hon. Gentleman give way?

Mr. Lloyd: No.

Mr. Janman: The hon. Gentleman is frightened to give way.

Mr. Lloyd: We are debating not only progressive measures from the European Commission but also the way in which the Government are prepared to sabotage the interests of our working people. By their stupid and crass approach to European matters, the Government are jeopardising not only the position of part-time workers but their own position. I shall develop that matter later.

Mr. Janman: I am grateful to the hon. Gentleman for giving way. It proves that he is not frightened. Why does the hon. Gentleman think that the Government are sabotaging the interests of working people? I emphasise the word "working". If the Government were to support the directive on part-time working and some of the other European Commission directives, there would be a substantial reduction in the number of people in work.

Mr. Lloyd: I invite the hon. Gentleman to listen carefully to my speech. I hope that I can set his mind at rest and that he will have the intellectual honesty to vote with the Opposition on this matter. By being alarmist, the Government may please Conservative Members, but such an approach serves no useful purposes to employers or to employees.
The Minister has said that, throughout Europe, there are about 14 million part-time workers and about 10 million temporary workers. In Britain there are well over 5 million part-time workers. The Minister says 6 million, but we are not here to quibble over the exact figure or to deny that part-time work plays an important part in our economy. Our amendment makes it clear that we value the contribution of part-time workers and recognise their importance and the importance of such work as a means of offering flexibility to employers and employees. In so far as the relationship is acceptable to both parties, the Opposition are as determined as anybody to make sure that part-time work remains a useful and successful part of the national working and economic scenes.

Mr. Patrick Cormack: Will the hon. Gentleman also recognise that there is a difference between temporary and part-time work, and that both are equally important?

Mr. Lloyd: I agree, and the Labour party has no objection to temporary work. Many employers are beginning to employ part-time and temporary workers on contracts equivalent to those offered to full-time workers. The Incomes Data Service found in its study of June of this year that, out of a sample of 32 companies, all but five had made improvements to the conditions of part-time workers over the past five years, and had moved them more into line with full-time workers. We know from evidence given to the Select Committee on Employment that Unilever feels that it gets a 9 per cent. productivity advantage by employing part-time workers. Many firms in banking, finance and retail are beginning to bring part-time conditions into line with those for full-time workers. Ford has recently announced that it intends to employ part-time workers so as to get over problems of absenteeism.
Government Departments, such as the Treasury and the Customs and Excise, have moved some way towards approximating conditions for both full and part-time workers. In none of those companies and Departments has the cry gone up that they are either jeopardising employment or introducing an unnecessary financial

burden. The House must understand that many enlightened employers already recognise that it is in their interests, both in moral and productivity terms, to make sure that this happens. In some cases, this is because both local or national skill shortages, or demographic changes, have meant that employers have had to take into account the need to provide flexible employment conditions so as to attract into work people who would not otherwise be available.

Mr. Butterfill: I thank the hon. Gentleman for giving way; he has been most generous in doing so. Does he accept that the principle of subsidiarity is important, and, if so, does he accept that a directive such as this should be introduced only if there is serious distortion of competition arising out of it that needs to be corrected? Does he also accept that the Commission has given no evidence that there is any such distortion?

Mr. Lloyd: While we understand the concept of subsidiarity, and in some circumstances would accept it as a rationale for national decision making, the Opposition accept the social charter as a necessary parallel to the single market process. We not only believe that the charter is social justice, but demand that employees should be given social conditions comparable to the best in Europe. That is important, and because of the Government's failure to do anything to protect the employment rights and conditions of part-time workers, we insist that the Community brings in these directives to do so instead. That does not violate the principle of subsidiarity, but rightly means that, where a Government fail to behave acceptably, the Commission has an obligation to protect the people of the country.
The Minister did not address the downside of part-time work. While national and local skill shortages and demographic change may lead to employers needing to offer flexible employment, the Opposition are not content to rely on those factors as the guarantor of acceptable working conditions for millions of lower paid, part-time workers, the majority of whom are women.
More than four in five part-time workers are low-paid on any normal definition of that term. We are not prepared to accept the lack of training opportunities for the low-paid. This country and Ireland alone in the Community have legal systems that actively discriminate against part-time and temporary workers, allowing their employment conditions to be worse than those of people in full-time work. The Opposition find that morally objectionable and economically unjustifiable.
I am conscious of the challenge put to me by the hon. Member for Thurrock (Mr. Janman). The existence of legal discrimination against part-time workers is tantamount to indirect discrimination against women, and runs contrary to article 119 of the treaty. No one looks to the present Government to do anything practical about those problems. We welcome the decision made by the courts in the Bilka-Kaufhas case, which made it clear that less favourable pensions for part-time workers ran contrary to article 119 and effectively amounted to unlawful discrimination against women. I want to place on record our strong support for the recent decision by the Equal Opportunities Commission to take the Government to court on the issue of indirect discrimination against


part-time workers who work too few hours to qualify for protection against unfair dismissal, and who lose out on redundancy compensation.
We applaud the EOC's decision, but will the Minister quash once and for all the rumour that the Government intend to extract a penalty from the EOC for its temerity in taking them to court? It is important that the Minister should place it on record that there will be no retribution.
There is no doubt that our legislation directly discriminates against women, and as such it has no role in the kind of society that we want to build, although it is entirely consistent with the policies of a Government who have abandoned any pretence of making available adequate child care provision and the concept of allowing women to go back to work.
The Minister cited his own study. I propose to quote from the EOC's study:
The two disincentives to women working longer hours, or in some cases going out to work at all, are the lack of affordable quality child care while children are young and the absence of attractive employment prospects.
The provision of adequate child care is in the Government's hands; they do nothing about it and therefore condemn many women to part-time work. The lack of acceptable work for women is central to the part of the directive dealing with training.
Will the Minister explain why the Government oppose —or have made no positive noises about—that part of directive 100 which would give part-time workers access to training on an equivalent basis to full-time workers? Without that, he knows that he condemns many women to continue in part-time work when they would benefit from the training that would allow them to move into a different kind of employment when their circumstances allow it.

Mr. Janman: The hon. Gentleman is discussing part-time workers, the way in which Britain goes about things and the opposition to the directives. He says that we are discriminating against women in some way. That is complete and utter piffle. Only 6 per cent. of women in part-time work in Britain are in part-time work because they cannot find full-time work. More than nine in 10 are in part-time work because that is what they want and because part-time working fits in with their other responsibilities, such as looking after their families.
We have a good record in the European Community when it comes to providing part-time jobs in the marketplace. How can the hon. Gentleman seriously allege that, in standing up to the Commission on the directives, we are acting against women's interests, given that we merely seek to protect part-time jobs which more than 94 per cent. of part-time women workers want?

Mr. Lloyd: That was an inordinately long intervention. The Government survey is nonsense. Those 94 per cent. of women do not seek part-time work: they work part-time because in many cases child care facilities are not available to enable them to work longer hours. The hon. Gentleman has little experience of these matters. I invite him to come and talk to many women—my wife is an example—[Laughter.] I am amazed that the Government Whip, the hon. Member for Derby, North (Mr. Knight), should find it a source of mirth that the spouse of an hon. Member should be denied access to better working conditions because of inadequate child care facilities.

Mrs. Edwina Curries: May I suggest that the hon. Gentleman shuts up and sits down, and allows somebody on the Conservative Benches to put the case better?

Mr. Lloyd: The hon. Lady is never shy to put forward the virtues of her arguments. If she will allow me, I shall make my case in my own way. I shall listen with interest to what she has to say when she makes her speech.
There is discrimination against women in the workplace because of the discriminatory nature of legislation. It is important to contrast the position in Britain with that in other countries. The Minister made great play with the position elsewhere and mentioned that there is a higher proportion of people in part-time work in the Netherlands and in Denmark than there is in Britain. They have greater regulation—[Interruption.] The Minister disagrees. Can he give any examples of comparable discriminatory legislation against part-time workers in those countries? Such legislation does not exist in those countries, but it certainly exists in Britain.
I know that Sweden is not a member of the EEC, and as such will not be bound by the directives, but it already has conditions that apply to part-time workers that are more stringent than those that would apply under these directives, but it found that there was no diminution in part-time work.
France is probably a better example. In 1982, it introduced provisions that are much tighter than those contained in the directives. Between 1983 and 1988—a period that the Government often use as a basis for jobs growth—the increase of part-time work in Britain was about 26 per cent., but in France it was 36·6 per cent. Despite all the onerous regulations on part-time work in France, there was a much greater increase than in Britain —[Interruption.] The figures are in front of hon. Members, and it is for them to draw the interpretation from them that I draw.
There has been a greater growth in the proportion of part-time work in France than in Britain, despite the Minister's claim that regulations would destroy jobs. There is no evidence for that. I have read the methodology of the Department of Employment; the Minister should be ashamed to pray that in aid, because it is a shoddy piece of work.
Even if the figure of £1 billion that the Minister said would be the cost of the directives was accurate, is not that a little less than the costs imposed on business through the uniform business rate? Can the Minister draw any conclusions about the relative impact of the two? Will the cost of the uniform business rate destroy jobs in the way that the Minister claims the cost of the directives will do? If cost is central, the Government have already cost business more by the one move to the unified business rate than the directives will cost.
The Minister spoke about removing barriers, but that is a myth that the Government have perpetuated for many years. It is nonsense to say that the so-called barriers would act as a disincentive to employment. Survey after survey shows that only a small proportion of employers are deterred from employing people because of onerous employment rights.
According to a survey undertaken by Wood and Smith in 1988 for the Department of Employment, less than 1 per cent. of employers gave as a reason for employing


part-timers the fact that they have fewer rights under employment protection law. The idea that a lack of employment rights is an incentive to employ is nonsense.
Three quarters of employers said that they used part-time workers to carry out tasks that are done for a limited number of hours, 30 per cent. to match staffing levels to peaks in demand, 33 per cent. because applicants wanted part-time work and 21 per cent. in order to keep staff who no longer wished to work full-time. There was no suggestion that removing the barriers would, as the Government claim, have any real effect on the location of employment.

Mr. Butterfill: Is not the hon. Gentleman saying that, because grass is green, everything that is green is grass? What he is saying is a non sequitur. If he is saying that employers do not choose to employ part-time workers because they cost less, that does not mean that they choose them for that reason. It does not mean that they would not be deterred if there were these impositions. He is surely putting the matter the wrong way round.

Mr. Lloyd: The hon. Gentleman has to understand that the position cannot be tested and I cannot give empirical evidence of what would happen were the directive in force, because the situation has not arisen. I have given examples of what happens in other countries and the view of employers, and that is as far as I can go. The hon. Gentleman can speculate, and his ideology insists that he speculate in a particular direction. All I can say is that the evidence does not support the views that he puts forward.
The same arguments have been put forward in the past, when other social legislation affecting employment terms and conditions has been introduced. I can remember Conservative Members arguing that equal pay would lead to lack of work for women. It did not. We saw a growth of employment for women in the period that followed. Whenever social legislation offers protection to workers, the Conservative party says that it will destroy jobs. It does not in Europe and it does not in Britain, but hon. Members want to believe it, because it fits in with their ideology and with the myth that protecting people at work harms jobs. It gives their economic and social arguments a veneer of respectability.

Mr. Quentin Davies: Is the hon. Gentleman denying the proposition that an increase in the price of anything reduces demand for it—a proposition which applies equally to labour as to any other commodity? If he is denying that, he is altering the basic rules of economics, as well as, I am afraid, denying the rules of common sense.

Mr. Lloyd: The hon. Gentleman has a weak understanding of economics, because there is something called derived demand and if he consults elementary text books he will discover that that can account for exactly that situation. The hon. Gentleman will forgive me if, rather than engaging in a debate about elementary economics, I press on with the more important matter of the directives.
It is significant that the Minister talked hardly at all about specifics. He said nothing about the Government's insistence on denying part-time workers access to training. That beggars belief, given the Government's claimed

commitment to high quality training. The Opposition do not believe their claims, and we are reinforced in our lack of belief by the Government's action on the directive.
Do the Government still believe the nonsense peddled some time ago in the press that people on high incomes working fewer than eight hours would automatically be exempt from national insurance contributions as a result of one of the directives? It is important that the Minister should face up to the truth rather than continue to peddle that nonsense.
The Government's approach is dangerous, because, if the Minister is right, those on low pay could find themselves in difficulty. Lawyers would need to resolve the matter, but I can understand why the Minister argues as he does. But rather than risking a situation in which the French and Germans, having resolved their difficulties, accepted the directive and thus the situation that the Minister claims he is trying to defend us from, surely he would be better to negotiate seriously and not simply try to disrupt the whole basis on which the Commission and the Council of Ministers are proceeding—a much more important debate than the one in which the Minister wishes to engage. We should be in there; a Labour Government would be in there.

Mr. Forth: Can the hon. Gentleman explain this term that his party is so fond of using and abusing—"in there negotiating"? Officials from my Department spend days and days each month negotiating, and my fellow Ministers and I spend hours and hours, days and days, negotiating in the Council of Ministers. Where does the hon. Gentleman get the impression that all the Departments of Her Majesty's Government are not "in there negotiating" in the European Community?

Mr. Lloyd: I will tell the Minister precisely what I mean by that term. It comes up when Ministers make their frequent comments in the press—for example, when the now departed Secretary of State said that the Government would launch a crusade against the social charter, sounding like a latter-day Richard Coeur de Lion; when the Secretary of State told the press earlier this year, when the proposals were first drafted, that the Government intended to oppose them fundamentally; even when the Minister left the Council of Ministers meeting a couple of weeks ago and said that he felt that some long and tough negotiations would take place. It came up when the Minister told the TUC not so long ago that the Government were not prepared to accept anything in the first two directives, and would accept only a little in the third.
That is why we believe that the Government are not negotiating, and have no intention of giving part-time workers decent working conditions. That is why the Opposition disagree fundamentally with their position. We should be in there negotiating: we should be protecting the interests of part-time workers, and, where there is a legitimate national interest to defend, we should be defending it. What we should not be doing is what the Government are doing. They are using their own internal war as a justification for a war in Europe, and using divisions within the party as a reason to continue to play the European card to promote dissension—although, in so doing, they jeopardise that legitimate national interest, and the interests of workers.
In general, the Opposition welcome the directives—although parts of them should be subject to negotiation —and will do what we can, certainly when we are in government, to pursue them unilaterally if needs be.

Mr. Jonathan Aitken: On a point of order, Mr. Deputy Speaker. I fear that we are suffering the effects of a conspiracy of elongated boredom on the part of the two Front Benches. The hon. Member for Stretford (Mr. Lloyd) has now bored the House for 28 minutes, with much less excuse than my hon. Friend the Minister, who had the Government's point of view to present—and he took 24 minutes.
In a 90-minute debate, with many distinguished former Ministers, Back Benchers and other hon. Members on both sides of the House wishing to contribute, this really is a disgrace. It is yet another example of how the procedures of the House simply cannot work in 90-minute debates that take place late at night.

Mr. Deputy Speaker (Sir Paul Dean): I understand the point that the hon. Gentleman is making. It is true that the debate must end at 11.45 pm. I have the strong impression that the hon. Member for Stretford (Mr. Lloyd) is approaching the conclusion of his speech.

Mr. Lloyd: I was, Mr. Deputy Speaker; but let me remind the House that I will make my own speech in my own time, on behalf of the Opposition.
I agree with the hon. Member for Thanet, South (Mr. Aitken) on one point: it is ridiculous that a Minister should return from a Council of Ministers meeting, and we should have a debate after that. Nevertheless, I am not prepared to fail to make the Opposition's case—and, more important, that of the people of this country—for the sake of those whom my hon. Friend the Member for Newport, West (Mr. Flynn) rightly describes as the "Bruges loonies" on the Conservative Benches.
This issue is far too important for us to let the Minister pursue his own ideological fantasies. People expect better of the Government, but they will not get it. They therefore look to the European Community to bring in the directives, and they will have the Opposition's support.

Mrs. Edwina Currie: I am not very happy about the wording of the motion. If we had tabled a motion to take note, or a motion that supported our Ministers in active negotiations to achieve whatever is best for the work force of this country, I should have felt very much happier. The wording of the motion is somewhat dismissive of part-time workers, the majority of whom, as the hon. Member for Stretford (Mr. Lloyd) said, are women.
The economics are probably wrong. Jobs in this country will not disappear in the 1990s. On the contrary, the demographic time bomb to which the Department of Employment drew our attention means that we shall be short of recruits in the 1990s. We shall not be short of jobs. Much of what has been said by the Minister flies in the face of all our efforts during the last 11 years to improve pensions and to ensure that people make an investment in their own future, with businesses being encouraged to help them to do so. It will cost us a lot more money if we do not pick up the point about pensions for part-time workers.
The Government are right to emphasise that the overall package is far too expensive and that to impose it on every business would be a mistake. To impose it overnight on business would also cause great problems. I shall restrict my remarks, therefore, to pensions for part-time workers.
The politics are wrong. If we asked women part-time workers whether they would like to have pensions as part of their part-time work, pro rata with their salaries, I think that they would be thrilled to bits. It is already good practice in this country; it is the policy of the very best employers and the practice is increasing year by year.
Who are we talking about? In 1989, 72 per cent. of all women of working age had paid jobs of one kind or another and 29 per cent. of them were part time. It is complacent nonsense to suggest that the reason they are part time is that they all passionately want to be part time. The reason that they are part time is that they are looking after children. In many ways that has to be in the public interest. It is certainly the policy on this side of the House that women should have such a choice. Twenty-nine per cent. of women with children under five are working part time; 49 per cent. of those with children between the ages of five and nine are working part time; 43 per cent. of those with children between the ages of 10 and 16 are working part time; but only 22 per cent. are working part time once their children reach the age of 16. Then they switch to full-time work. By that stage we are close to having eight out of 10 women in this country in paid work. Therefore, we are referring to millions upon millions of women for whom the preference for part time work is a matter of having no choice. We want them to be part time and we want to encourage them to do part-time work.
Even those women who are in full-time work in this country enjoy far fewer benefits, particularly with regard to pensions. The OPCS monitor of the general household survey for 1989, published on 30 October, showed that 80 per cent. of male full-time workers are in a pension scheme, whereas only 66 per cent. of female full-time workers are in a pension scheme. We do not yet have the 1989 figures for part-time workers in pension schemes, but they are mostly women and most of them do not stand a whisker's chance of being in a pension scheme unless they are employed by one of the most thoughtful and enlightened employers.
Let me pursue the question about loss of jobs. The Department of Employment says that by the end of the 1990s there will be 1 million new jobs. Conditions in the 1990s will not be the same as those that we experienced in the 1980s. There was a glut of young people in the 1980s. We had to find 1 million additional jobs just to keep unemployment below the 3 million mark. That will not happen now. The Department of Employment's own figures show that the number of 16 to 19-year-olds coming into the jobs market during the next few years will drop by 23 per cent. By the end of the century the number of people of working age under the age of 25 will have dropped from around the 8 million mark, where it is now, to about 6 million. So 2 million people will simply disappear. The Department of Employment has been hammering away, trying to persuade employers to take this fact on board and to be realistic about it.
What that will mean is more women workers. Again, the Department of Employment has said that, of the 1 million new jobs between now and the end of the century, 90 per cent. will have to go to women because there will be no fellas to do them. In particular, there will be no young


workers to do them. On the one hand, the Department says that 90 per cent. of the new jobs will go to women workers. On the other hand, it says, suddenly, that all those jobs will vanish. Frankly, I doubt it. I do not think that they will vanish. I am not sure that the hon. Member for Stretford made a very good case, but the economics are all there and the figures are all there.
However, my main concern and the reason why I shall not support the Opposition in the Lobby is that an important point of public policy has been completely missed. What do most businesses and working people in this country complain about? The answer is tax. If we add up the amount of tax that the average working man with a family is now paying, including income tax and VAT and all the other bits and bobs, one finds that a higher proportion of his income is taxed now than when this tax-cutting Government came into office in 1979. Most businesses would prefer to pay less corporation tax and less VAT.
It costs us a fortune to assist people who do not have a pension. What is the largest burden on businesses? Tax. What is the largest departmental budget? Social security. What is the largest single item in the social security budget? Pay-as-you-go pensions, and the second largest item is income support. I would like to bet that if the Department of Employment carried out a careful analysis of the social security statistics, it would find that many of those who are claiming income support and who have no contributions towards their pensions are people who worked part time —mostly women—or women whose husbands did not have a pension scheme or whose pension scheme did not have an allowance for survivors.
Three and a quarter million women of pensionable age live alone in this country. They are—they do not wish to be—a considerable burden on the public purse. What bothers me is that if we continue to be so negative about notions of encouraging pensions for part-time workers, that will increase. It is the one budget that will not shrink. In the interests of keeping public expenditure under control and of bearing down on inflation, on which we do not have the best record in Europe, I believe that there is a strong public policy case for looking once more at the question of pensions.
We should begin to require employers to work towards having a decent pension scheme for every employee. That should be done gradually, over a long period. We could exempt smaller businesses, as we do from many other burdens, and ensure that the costs were kept under control for them. The pension should be pro rata to the employee's salary, as is the case in Marks and Spencer, Sainsbury and many other businesses. The costs should be shared between the worker, the employer and the Government —in the sense of tax relief, which is how we could encourage the development of the pension scheme.
That would mean that in years to come fewer people would be dependent on the pay-as-you-go pension, fewer people would need to draw social security and there would be more people proudly having invested in their own pensions with the encouragement and the contributions of their employers. That fits mightily with everything that this Government have tried to do since 1979.

Mr. David Bellotti: Early in his speech the Minister quoted figures relating to our colleagues in the European Community and the directives that they had implemented. That was a weak argument with which to begin, because surely the purpose of the European Community is to encourage good practices across all the countries in the Community. We and other countries should be setting an example. To compare this country with those that do nothing is a very poor argument.
The Minister then quoted only the employers and said that they were not in favour of the directives. He gave us a whole string of reasons for that, but his quotations seemed selective. Is he aware that the Confederation of British Industry gave evidence stating that
cost savings are not significant factors on most employers' decisions to employ part-time staff"?
It is interesting that the Minister chose to ignore that evidence from the CBI and did not share it with us, while trying to convince us that all employers are against the directives.
Perhaps I can help the Minister a little more. If he had done some further reading, he would have found that a Department of Employment report on "Labour Use Strategies" concluded:
The main reasons given for using part-time staff were to carry out tasks that only need to be done for a limited number of hours a day or to meet peaks in demand".
If the Minister had looked further, he would have found even more compelling reasons to move from the policies that he has advanced. He quoted some companies, but is he aware of the practices of that great company, Marks and Spencer, which has equal rights for its part-time workers across a variety of personnel practices? I wonder whether he is aware of the policy of the Halifax building society which offers equal rights for all employees. If the Minister took evidence from all employers, he would conclude that the views which he put to the House are not complete.
I suspect that the Minister's views are more concerned with supporting Government policy on a variety of matters. I do not believe for one moment that he is trying to be fair and just to people in terms of employment. When he looks at the Government's training policy, he might like to consider why their employment training programme discriminates against part-time training. Why is there legislation that states that a person who moves to employee status has to continue to work for 30 hours a week to get the training allowances? That is interesting, coming from a Government who believe that part-time work and part-time training are valuable.
The pressures of Government policy on local authorities have led to a reduction in the pay and conditions of part-time staff. Supply teachers employed by my local education authority are no longer paid pro rata or enjoy working conditions pro rata. That is a direct result of the Government's policy of curbing local expenditure. Supply teachers are doubly hit—they cannot work during the holidays because schools are not open, so they cannot get allowances.
The Government's policy in requiring local authorities to carry out competitive tendering has led to a reduction in the pay and conditions of part-time staff. In my county of East Sussex, many part-time staff, particularly cleaners, no longer enjoy the pension rights that they enjoyed before the authority was forced to carry out competitive


tendering. The Minister said that he welcomed the health and safety aspects of the directive. Does he accept that the competitive tendering policies that he is forcing local authorities to undertake put some of those aspects at risk, because people try to rush their work?
Part-time youth workers are discriminated against, but the directives would help them if the Government accepted them warmly. The Government's curbs on local authority spending have led, in local authority after local authority, to a reduction in the pay and conditions of part-time youth and community workers. Those who work for 10 per cent. of a full week do not get 10 per cent. of the pay, benefits, holiday or pension contributions of full-time workers, despite their being equally qualified. If the Minister says that he supports the large numbers of part-time workers, why will he not do more to help part-time youth workers?
The hon. Member for Derbyshire, South (Mrs. Currie) referred to women. She was right in everything that she said. Part-time women workers are disproportionately affected in terms of working conditions compared with men. Child care provision is perhaps the greatest concern. Not long ago, the Government had the power to do a great deal but did little. Extending the tax relief proposals to cover all women with children in child care would be an enormous help for part-time women workers.
It is a question of what principle the House wants to adopt. We should adopt a fair standard in terms of pay, training, holidays, pensions and health and safety—whether a person works part time or full time. The Government's attitude to non-standard work is to support the small number of mean-minded employers who do not want to meet the costs that they should meet. The Labour amendment does not go far enough, but we will support it. There is much for the Minister to answer, and I hope that he will address some of the issues which I raised.

Mr. Ian Bruce: I declare an interest that is directed more to knowledge than to pecuniary advantage. I was an employment agent in Yorkshire for more than 10 years and I still own a technical employment agency, although it is not active.
It is always surprising to hear hon. Members say how much they support an EC directive or draft directive. They do not say that EC directives have changed enormously since the Labour and Liberal parties rushed forward to say that the social charter was a wonderful idea. They seem to think, or suggest, that the EC directives of today are the same as those which came before us years ago. It was clear from the earlier directives that the European Community was against part-time and temporary work. It is now saying, however, that those employment relationships cannot be called into question in any circumstances. Over two decades, the Commission has produced documentation in which it has attempted to persuade us that part-time and temporary work is damaging and needs to be brushed away. It has suggested that regulations should be introduced to stop people being part-time or temporary employees for a long period.
I was surprised to hear what my hon. Friend the Member for Derbyshire, South (Mrs. Currie) had to say about part-time employees. Any private employment agency will say that the relationship between part-time or

temporary work and employers is such that an employer will prefer to take on permanent staff. In general, an employer will prefer to take on full-time staff rather than part-time staff. Unless that is understood, the relevant arguments will be turned on their head. It is necessary almost to persuade employers that there is some market advantage in giving part-time workers full rein and allowing them to do what they want in their employment.
The average employment agency will have filing cabinets full of details of people who want part-time work. The women among them are not saying, "If I could get child care for my children for this number of hours or that number, I would do full-time work." In general, women who have young children try to ensure that they are with their children for as long as possible. Against that background, they try to find part-time work.

Mrs. Currie: My hon. Friend is right, but if employers want full-time workers and they appoint part-time workers, they do so because those are the only workers they can get. That does not rule out an obligation on both sides to ensure that, when part-time workers end their working lives, they are entitled to some sort of pension.

Mr. Bruce: I understand what my hon. Friend says, but I believe that this is the wrong debate in which to advance the views that she has outlined. I do not think that she believes that the EC should frame a set of directives to ensure that all employees should have equal conditions.
I give an extreme example. Let us suppose that an employment agency is telephoned on a Monday and told, "My employee has not turned up for work and I want a part-time or temporary employee." Let us suppose also that the employer wants especially a temporary employee. The documents are aimed at ensuring that the person who is told to rush to Smith Brothers because someone has not turned up for work is paid the same wages as the comparable staff in the organisation, has had the same training, is a member of the same pension scheme and is entitled to the same national insurance.
The market determines that the people that employment agencies send to employers to fill gaps are paid more money than full-time employees, especially in London. In other areas, where perhaps there are plenty of people available to do the work, temporary employees will be paid less money than full-time employees. The employer who takes in a temporary employee from an agency will almost always pay more money per hour for him or her than he would normally pay his own employee to do the same work. The relationship is complex. To suggest that everyone must have the same conditions is nonsense.

Mrs. Maria Fyfe: Will the hon. Gentleman clear from his mind for a moment his hostile feelings towards the Community in general and concentrate on the principle? Is he saying that in some parts of Britain, because there is a surplus of available part-time labour, employers should get away with paying less than the rate per hour that they would have to pay full-time workers? Does he agree that that would be a great injustice to those workers, who are mostly women, who have to work part time because of other responsibilities?

Mr. Bruce: I am sorry that the hon. Lady has never been in the real world. In the real world, people earn money on the basis of the demand for their particular skills. That happens in every job—except perhaps being a


Member of Parliament, as hon. Members seem to get paid the same amount of money whether or not they have any knowledge of a subject. We are all paid the same.

Mrs. Fyfe: Will the hon. Gentleman give way?

Mr. Bruce: No; I have answered the hon. Lady's point.
Some points were made earlier about trade union hostility. There is indeed a great deal of such hostility to temporary employees. I am certain that that stems from the fact that trade unions do not like the thought of temporary employees not paying trade union dues. I have evidence to support that. The Manpower organisation found an easy way of ensuring that it had no bother from the trade unions when it supplied drivers to certain companies. Manpower had an agreement with the area office of the trade union involved that the company would collect the equivalent in trade union dues for every day that someone worked and ship it off to the trade union. The union got its money, although it did not know who the heck was supposed to be part of its membership. The union told the company that it could enter any of the union's closed shop areas because it was collecting union dues.
With regard to health and safety, it is right that people should have the same safety conditions whether or not they are employed on a part-time or temporary basis. We must ensure that the conditions are reasonable, because some earlier draft legislation tended to suggest that a temporary employee might have to be given one or two weeks' worth of safety training before he or she was allowed to start work. I believe that temporary employees tend to be placed in the least hazardous jobs and in those that do not require as much training. Clearly that is best for a worker who has been taken on for only a short period. I will support the Government in the Lobby.

Mrs. Maria Fyfe: I was surprised to hear the Minister decry the consultation efforts of our opposite numbers in the Community. He recently admitted in a letter to me that, when consulting British organisations about maternity rates, he had not thought to consult—of all people—the Royal College of Midwives, and nor had he consulted a large number of women's organisations. He does of course consult employers, and he then presents their views as the consensus of British opinion.
The Minister compounded the offence by quoting a poll of the opinions of women in Britain, saying that only 6 per cent. want to work full time. That is hardly surprising when we consider that, by 1991, there will be more than 9 million people over 65 in the United Kingdom and 11 million children under 14. That amounts to more than 20 million people. When we consider that the responsibility for caring for the elderly and for young children lies mostly with women, then of course they will want to look for part-time work—if they feel able to look for work at all.
We must ask women what they would like for their life style if child care were provided. With the exception of Ireland, Britain has the worst record of child care among EC countries. If we did not have the disgraceful state of community care in this country, many more women would welcome the chance to work full time. The Government are bandying nonsensical figures about and taking no account of women's wishes; they are using their hostility to

the EC as an excuse for permitting some unscrupulous employers to get away with paying part time women workers disgracefully low pay.

Mrs. Audrey Wise: Does my hon. Friend agree that, whether or not women want to work full time or part time, they should have equal conditions and not be exploited? Is she familar with the Department of Employment's statement that acknowledges that part timers and temporary workers are treated worse and states that that is the price that women are prepared to pay? Women are not asked whether they are prepared to pay that price. They should have the right to decent conditions, whether they work full time or part time.

Mrs. Fyfe: My hon. Friend is absolutely right. I pay tribute to her great record of work on behalf of working women, in particular low-paid, part time working women. Many thousands of working women in this country work for disgracefully low rates. The bunch opposite argue that employers should get the benefit because that is what the market demands. An hon. Member said that the dearer a commodity is the harder it is to sell it. That kind of thinking sent seven-year-olds into the mills during the last century, and there is absolutely no excuse for it.
I have still to hear why Conservative Members think that it is acceptable to pay part-time workers lower rates of pay and put them in worse conditions than those in full-time jobs. All their criticisms of EC regulations do not justify their views. If any Conservative Member would like to interrupt me to explain why he thinks that a part-time worker should have less pay per hour or worse working conditions, I should be glad to hear from him. No Conservative Member is rising to his feet to intervene. The debate is about letting greedy and selfish employers get away with it.

Mr. James Paice: Many of the points that I wanted to make have already been excellently made by my hon. Friend the Minister, but certain factors need to be brought to the attention of the House, not least the hollowness of the Opposition's amendment. It specifically states that many people, including a high percentage of women workers, rely on part-time work in the absence of full-time employment. The Opposition have produced no evidence to justify that statement, which is the meat of their amendment. My hon. Friend the Minister made it clear that all the evidence is exactly the opposite. Not only the labour force survey but the Select Committee on Employment, on which I served until a year ago, have made it abundantly clear that there is no evidence that any more than a tiny proportion of part-time workers have any ambition to do anything other than part-time work. That destroys the Opposition's amendment.
The hon. Member for Stretford (Mr. Lloyd) stressed that a number of businesses are now providing good terms for their part-time workers—equivalent or even better than those for their full-time workers. They are providing the pensions that my hon. Friend the Member for Derbyshire, South (Mrs. Currie) mentioned, and all the perks that workers want. However, the hon. Gentleman failed to recognise that they are voluntarily providing them. Those business are able to assess, first, whether it is


necessary to provide such terms to recruit part-time staff and, secondly, whether they are in a position to provide those opportunities.
The important thing that one must understand—it goes over the Opposition's head no matter how many times we say it—is that any business can pay its work force only that which it can afford. If it cannot afford to pay, the result may be a smaller work force, if one at all.

Mr. Peter Bottomley: Will my hon. Friend give way?

Mr. Paice: I know that the Minister wants to respond to the debate, so my hon. Friend must forgive me for not giving way.
I agree with the Minister that the directives would affect the availability of jobs. In my constituency, in common with that of my hon. Friend the Member for Stamford and Spalding (Mr. Davies), many people are involved in field-scale vegetable production. Large arable farms employ hundreds, and in one case thousands, of people for seasonal, casual work. That work attracts people from all over the country.
Recently we concluded lengthy negotiations with the Inland Revenue about oppressive regulations that it wanted to impose on employers in relation to the employment of part-time workers. Those negotiations forced the representatives of the pre-packing and processed vegetable industry to examine all aspects of the employment of their work force. They discovered that they were reliant on their freedom to meet the market for labour and for their produce. If extra restrictions had been imposed, thousands of jobs would have been lost. That would have been a disaster for my constituents who rely on such work, particularly in the summer when they are happy to be outside.
It would be equally disastrous if the directives went through unamended. I support the Government's stand.

Mr. Jonathan Aitken: On a point of order, Mr. Deputy Speaker. I seek your ruling about the possible violation of Standing Order No. 14, which states:
if Mr. Speaker shall be of the opinion that, because of the importance of the subject matter of the motion, the time for debate has not been adequate, he shall, instead of putting the question as aforesaid, interrupt the business, and the debate shall stand adjourned till the next sitting".
In support of my case, I cite the fact that the Opposition spokesman, the hon. Member for Stretford (Mr. Lloyd), took up no less than 30 minutes of the debate. That represented one third of the time allocated. I believe that it was Disraeli who said of Gladstone that he was
inebriated with the exuberance of his own verbosity.
Tonight, the hon. Member for Stretford anaesthetised the House with his own boredom. It was an amazing performance given the short time allocated.
Even my hon. Friend the Minister is not entirely without blame as he took 24 minutes. I admit that there were many interruptions in his speech and he had to deploy the Government's case, so I cheerfully acquit him. Nevertheless, we need a voice from the Chair to stop such abuse of our procedures, which destroys the ability of Back-Bench Members to contribute. Many of my hon. Friends either walked out because they were unable to

speak or they truncated their remarks to an unreasonable degree. Debates late at night cannot go on like this if the Front-Bench spokesmen take up such a large percentage of the time allocated for the debate.

Mr. Deputy Speaker (Sir Paul Dean): I understand the hon. Gentleman's point and he has put it on the record. I must inform him and the House that I am not prepared, in all the circumstances, to adjourn the debate under Standing Order No. 14(1)(b).

Mr. Forth: I apologise to my hon. Friend the Member for Thanet, South (Mr. Aitken) and to the House for the length of my opening speech. I wanted to set out the Government's case, and this was the first opportunity that we had to do it. I also took nearly all the interventions that were made.
In the brief time left, I want to answer my hon. Friend the Member for Southend, East (Mr. Taylor), who left the Chamber because he was dissatisfied by my failure to answer him, although I thought that I had. My officials wrote me this answer, so it is pukka. We do not accept that article 100A is the correct legal basis and we have made our views known to the Commission and other member states, some of which share our view. These matters should be dealt with on the basis of unanimity. I hope that that satisfies my hon. Friend.
The debate has been about deciding between imposition and choice—about deciding whether we shall have a certain policy imposed on us by the Community or whether we shall leave the choice to employers. If, as a result of these measures, we risk ending up with fewer jobs and fewer part-time jobs, especially for women——

It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER proceeded, pursuant to Standing Order No. 14 (Exempted business), to put the Questions necessary to dispose of them.

Question put, That the amendment be made:—

The House divided: Ayes 112, Noes 153.

Division No. 28]
[11.45 pm


AYES


Abbott, Ms Diane
Cunliffe, Lawrence


Adams, Mrs. Katherine
Davis, Terry (B'ham Hodge H'l)


Allen, Graham
Dixon, Don


Archer, Rt Hon Peter
Evans, John (St Helens N)


Ashdown, Rt Hon Paddy
Fields, Terry (L'pool B G'n)


Barnes, Harry (Derbyshire NE)
Flynn, Paul


Barron, Kevin
Foster, Derek


Beith, A. J.
Foulkes, George


Bell, Stuart
Fyfe, Maria


Bellotti, David
George, Bruce


Benn, Rt Hon Tony
Godman, Dr Norman A.


Bennett, A. F. (D'nt'n &amp; R'dish)
Griffiths, Win (Bridgend)


Benton, Joseph
Harman, Ms Harriet


Bermingham, Gerald
Hinchliffe, David


Bradley, Keith
Hood, Jimmy


Bray, Dr Jeremy
Howarth, George (Knowsley N)


Brown, Nicholas (Newcastle E)
Howells, Geraint


Brown, Ron (Edinburgh Leith)
Howells, Dr. Kim (Pontypridd)


Caborn, Richard
Hoyle, Doug


Callaghan, Jim
Hughes, John (Coventry NE)


Campbell, Menzies (Fife NE)
Hughes, Simon (Southwark)


Clark, Dr David (S Shields)
Illsley, Eric


Clay, Bob
Ingram, Adam


Clelland, David
Jones, Barry (Alyn &amp; Deeside)


Cohen, Harry
Jones, Martyn (Clwyd S W)


Cousins, Jim
Kinnock, Rt Hon Neil


Cox, Tom
Kirkwood, Archy


Cryer, Bob
Lamond, James






Leadbitter, Ted
Pike, Peter L.


Livsey, Richard
Powell, Ray (Ogmore)


Lloyd, Tony (Stretford)
Quin, Ms Joyce


Lofthouse, Geoffrey
Reid, Dr John


McAllion, John
Richardson, Jo


McAvoy, Thomas
Rogers, Allan


McCartney, Ian
Ross, Ernie (Dundee W)


Macdonald, Calum A.
Rowlands, Ted


McFall, John
Short, Clare


McKay, Allen (Barnsley West)
Skinner, Dennis


McKelvey, William
Smith, C. (Isl'ton &amp; F'bury)


McLeish, Henry
Smith, Rt Hon J. (Monk'ds E)


McMasfer, Gordon
Smith, J. P. (Vale of Glam)


Madden, Max
Soley, Clive


Mahon, Mrs Alice
Spearing, Nigel


Marek, Dr John
Steinberg, Gerry


Martin, Michael J. (Springburn)
Taylor, Mrs Ann (Dewsbury)


Martlew, Eric
Thompson, Jack (Wansbeck)


Meale, Alan
Turner, Dennis


Michael, Alun
Wardell, Gareth (Gower)


Michie, Bill (Sheffield Heeley)
Wareing, Robert N.


Moonie, Dr Lewis
Welsh, Andrew (Angus E)


Morgan, Rhodri
Welsh, Michael (Doncaster N)


Morley, Elliot
Williams, Alan W. (Carm'then)


Murphy, Paul
Wise, Mrs Audrey


Nellist, Dave



O'Hara, Edward
Tellers for the Ayes:


O'Neill, Martin
Mr. Frank Haynes and


Patchett, Terry
Mrs. Llin Golding.


Pendry, Tom





NOES


Aitken, Jonathan
Davis, David (Boothferry)


Alexander, Richard
Day, Stephen


Allason, Rupert
Devlin, Tim


Amess, David
Dunn, Bob


Amos, Alan
Eggar, Tim


Arbuthnot, James
Evennett, David


Arnold, Jacques (Gravesham)
Fallon, Michael


Ashby, David
Favell, Tony


Aspinwall, Jack
Fishburn, John Dudley


Atkinson, David
Forman, Nigel


Baker, Nicholas (Dorset N)
Forsyth, Michael (Stirling)


Beggs, Roy
Forth, Eric


Bennett, Nicholas (Pembroke)
Fox, Sir Marcus


Bevan, David Gilroy
Franks, Cecil


Blackburn, Dr John G.
Freeman, Roger


Blaker, Rt Hon Sir Peter
Gale, Roger


Boswell, Tim
Glyn, Dr Sir Alan


Bottomley, Peter
Goodhart, Sir Philip


Bowis, John
Goodlad, Alastair


Brazier, Julian
Goodson-Wickes, Dr Charles


Bright, Graham
Greenway, John (Ryedale)


Brown, Michael (Brigg &amp; Cl't's)
Gregory, Conal


Bruce, Ian (Dorset South)
Griffiths, Peter (Portsmouth N)


Buck, Sir Antony
Hague, William


Burt, Alistair
Hamilton, Hon Archie (Epsom)


Butcher, John
Hampson, Dr Keith


Butler, Chris
Hanley, Jeremy


Carlisle, Kenneth (Lincoln)
Hargreaves, Ken (Hyndburn)


Carrington, Matthew
Harris, David


Chalker, Rt Hon Mrs Lynda
Haselhurst, Alan


Chapman, Sydney
Hawkins, Christopher


Chope, Christopher
Hayes, Jerry


Coombs, Anthony (Wyre F'rest)
Hayward, Robert


Coombs, Simon (Swindon)
Hicks, Mrs Maureen (Wolv' NE)


Cope, Rt Hon John
Hind, Kenneth


Cormack, Patrick
Howard, Rt Hon Michael


Couchman, James
Howarth, G. (Cannock &amp; B'wd)


Cran, James
Howell, Ralph (North Norfolk)


Currie, Mrs Edwina
Hughes, Robert G. (Harrow W)


Davies, Q. (Stamf'd &amp; Spald'g)
Hunt, Sir John (Ravensbourne)





Hunter, Andrew
Powell, William (Corby)


Irvine, Michael
Raffan, Keith


Jack, Michael
Redwood, John


Janman, Tim
Rhodes James, Robert


Johnson Smith, Sir Geoffrey
Riddick, Graham


Jones, Gwilym (Cardiff N)
Ridley, Rt Hon Nicholas


Key, Robert
Rumbold, Mrs Angela


Kilfedder, James
Ryder, Richard


Kirkhope, Timothy
Sackville, Hon Tom


Knapman, Roger
Shaw, David (Dover)


Knight, Greg (Derby North)
Shephard, Mrs G. (Norfolk SW)


Knox, David
Shepherd, Colin (Hereford)


Lawrence, Ivan
Speed, Keith


Lennox-Boyd, Hon Mark
Speller, Tony


Lester, Jim (Broxtowe)
Spicer, Sir Jim (Dorset W)


Lightbown, David
Spicer, Michael (S Worcs)


Lloyd, Peter (Fareham)
Stanley, Rt Hon Sir John


Lyell, Rt Hon Sir Nicholas
Stern, Michael


MacKay, Andrew (E Berkshire)
Stevens, Lewis


Maclean, David
Stewart, Andy (Sherwood)


McLoughlin, Patrick
Summerson, Hugo


Malins, Humfrey
Taylor, Ian (Esher)


Mans, Keith
Taylor, Rt Hon J. D. (S'ford)


Mates, Michael
Taylor, John M (Solihull)


Mawhinney, Dr Brian
Temple-Morris, Peter


Mayhew, Rt Hon Sir Patrick
Thompson, D. (Calder Valley)


Miller, Sir Hal
Thurnham, Peter


Mitchell, Andrew (Gedling)
Tredinnick, David


Molyneaux, Rt Hon James
Warren, Kenneth


Montgomery, Sir Fergus
Widdecombe, Ann


Moynihan, Hon Colin
Wiggin, Jerry


Neubert, Michael
Wilshire, David


Nicholls, Patrick
Winterton, Mrs Ann


Nicholson, David (Taunton)
Winterton, Nicholas


Norris, Steve



Oppenheim, Phillip
Tellers for the Noes:


Paice, James
Mr. Neil Hamilton and


Patnick, Irvine
Mr. Timothy Wood.


Peacock, Mrs Elizabeth

Question accordingly negatived.

Main Question put and agreed to.

Resolved,
That this House takes note of European Community Documents Nos. 8072/90 and 9601/90 on non-standard work; and endorses the Government's view that, in the light of the 1–6 million new part-time jobs created in the United Kingdom since March 1983 and the overwhelming preference of part-time workers for part-time rather than full-time work, the Government should not accept proposals which would greatly increase the cost of employing part-time and temporary workers and would significantly reduce the number of jobs, thereby damaging the competitiveness of our industry, and that of the European Community.

Mr. Peter Bottomley: On a point of order, Mr. Deputy Speaker. Following on the point of order made by my hon. Friend the Member for Thanet, South (Mr. Aitken), it should be put on record that the hon. Member for Stretford (Mr. Lloyd), fairly and courteously, gave way many times in his speech. I hope that my hon. Friend's point of order will be interpreted as a stricture on the time limits imposed on the debate rather than on the hon. Gentleman.

Mr. Deputy Speaker (Sir Paul Dean): That is not a point of order, but the hon. Gentleman has got his point on the record.

Information Technology

The Minister for Corporate Affairs (Mr. John Redwood): I beg to move,
That this House takes note of European Community Document No. 6864/90 on a Research and Development programme on Information Technology; and endorses the Government's view that Community support for research in this area should be given a high priority.
The Commission's proposal for the new IT research programme was published on 1 June 1990 as document 6894/90. The DTI submitted an explanatory memorandum on the proposal on 28 June. The Select Committee on European Legislation has reported on these documents. I am speaking on behalf of my noble Friend the Minister for Industry and my hon. Friend the Under-Secretary of State for Industry and Consumer Affairs, who is in Brussels on Government business tonight.
Further research and development into information technology will be the largest single element of the third framework programme. It will provide around £200 million a year of support for IT research which will be carried out by industry, research organisations and higher education institutions. The new programme will have three main objectives—first, to strengthen the scientific and technological basis of the IT industry; secondly, to promote collaboration between companies and the higher education institutions across the EC; and, thirdly, to promote research leading to the development of international standards—an excellent area for Community activity.
A good deal of technology has been developed under ESPRIT—the European strategic programme for research and development in information technology—I and II. This should be available to users. The new programme will devote more effort to technology transfer. In principle, the United Kingdom Government welcome this. We shall be working closely with the Commission to ensure that United Kingdom users of IT can benefit from these new Community initiatives. We are pressing the Commission hard to place more emphasis on research that meets the needs of users rather than just being driven by the technology. We want to ensure that clear priorities for the new programme are established; and that it is properly co-ordinated with research activities in related sectors.
The Government want a strong management committee, with the member states actively involved. We wish to modify a proposal for the special procedure that will allow the Commission to give grants outside the normal competition for proposals. We are critical of the idea and seek transparent procedures and opportunities for all corners to tender.
The United Kingdom Government are participating in the debate on priorities under the budget. We are broadly content with the Commission proposals, but would prefer to see more emphasis on software and business applications, avoiding an over-emphasis on silicon micro electronics. We also wish to see more smaller companies benefiting from the programme.

Mr. Tim Devlin: Will the European Community's initiative be targeted through the regional development fund or will it be pan-European, without particular emphasis on the special assisted areas?

Mr. Redwood: It is a programme for the IT industry throughout the European Community, run under its own procedures laid down in the document before the House and intended to assist collaborative projects with more than one company from more than one member state involved in the partnership.
In the past, the ESPRIT programme have provided opportunities for United Kingdom firms. United Kingdom organisations are involved in nearly 70 per cent. of the successful proposals—a high figure compared with that in other countries. Overall, 230 United Kingdom organisations have taken part in a total of 416 ESPRIT projects. The Government have every expectation that the United Kingdom will continue to be a strong and effective participant. We will press home our concerns in the negotiations. I commend the motion to the House.

Dr. Lewis Moonie: We are discussing one of the most important research fields in the world today. It is no exaggeration to say that it is, above all, on the future development of infomatics that the success or failure of EEC manufacturing industry next decade depends.
The Opposition welcome the commitment of 1,352 million ecu to the programme of collaborative research over the next five years. I might say in passing, however, that that is only a small fraction of the amount that IBM is likely to be spending over the same period. It is important to put the matter into perspective.
It is my duty to question the capacity of British industry to benefit from the framework II programme, given the difficulties that have arisen over the past few years and the Government's apparent inability—exemplified by the hands-off attitude of the Department of Trade and Industry—to realise that such programmes can be only a small part of the national effort that we require.
Let me refer to some of the problems that have beset our industry in the past few years. First, and perhaps most significant, is the recent takeover of ICL by Fujitsu, which effectively spelt the end of our indigenous control of our mainframe computer manufacturing industry. I welcome wholeheartedly the commitment by Fujitsu to continue research and development and manufacture in this country and wish ICL well under the new regime.
I regret, however, that such a takeover had to happen. Can we really stand here with our hands on our hearts and say that it could not and should not have been prevented? Sadly, the short-term attitude prevalent in British business, the lack of available funds for long-term investment and the hostility of successive DTI Ministers to any suggestion of a Government role probably made it inevitable.
A similar pattern can be seen in the loss of the transputer development, with INMOS now in foreign hands. It can be seen in the failure to follow up the undoubted benefits that should have accrued from the Alvey programme. It can be seen in the take-up by Japanese firms of the flat screen technology developed by United Kingdom companies. There is an endless list of missed opportunities, gleefully seized on by our competitors abroad.
There have also been successes and it is important to refer to them in order to put the matter into perspective. IBM maintains hugely successful operations in Britain, as


do Hewlett Packard, Digital Systems, Motorola and other foreign companies. But the major worldwide benefits of their success accrue to their own centres of operations in their own countries. Certainly, with Amstrad assembling its highly successful laptops and personal computers here —in my constituency, as it happens—we can draw some satisfaction. But the technology comes from the United States and almost none of the components used in the machines bear a "made in Britain" tag. Even in the production of software, in which we have long held the dominant position in Europe, people abroad are seeking to acquire the skills, which they are capable of developing themselves, by taking over British companies, as happened to Hoskyns earlier this year.
Are we then to welcome a programme from which few truly British companies will benefit? Where is the necessary Government action to underpin our attempts to ensure that they do?
Some general points are worth mentioning. The level of expenditure in Britain on civil research and development is far below that of our competitors. This programme, welcome though it is, is no substitute for that. We suffer from a crippling shortage of science and engineering graduates and, specific to the information technology industry, from a shortage of computer programmers. We also suffer from the ingrained prejudice that rewards and treats the skills of those groups as second class.
The level of skills training in Britain is woefully inadequate and far below that of our competitors—yet the Government have pushed through further cuts this year in the budget for that key area. The level of Government support for industry is a bit of a joke. They are so concerned with avoiding any suggestion of partiality that they have managed to ensure that on the so-called level playing field of Europe Britain is the only side to play without a goalkeeper.
How can we benefit from this imaginative programme of research? Each of the five areas of the programme is vital to the future of the industry. On microelectronics, I agree with the Minister that the programme will be of less benefit to United Kingdom manufacturers and research departments than to those in Europe. The withdrawal of Philips from involvement in semi-conductor manufacture is disappointing and, perhaps, a gloomy prognosis for the future.
Information processing systems and software, which increase the effectiveness of the computers that we use, are also important. Although it is not explicitly stated in the document that we are discussing, the development of the new safety-critical packages is important. They are now often required to run the complex systems that influence our daily lives. I should welcome some comment from the Minister on the Government's attitude to that.
The advanced business and home systems point to an exciting future when they are developed. The computerised manufacturing, design and research programmes could all benefit from collaborative research. They are all vital to our future prosperity. I suspect that, as with previous programmes, British-based programmes and research departments will secure a reasonable share of the available funds, probably slightly in excess of what we might expect based on the proportion of the research carried out. We are effective in taking up EEC money. We have to be, because there is not much available from any other source. I trust that the Minister will tonight give further reassurance about collaborative research, and in particular

that ICL will suffer no disadvantage because of its takeover when tendering. I hope that the Department will be vigilant in ensuring that other European companies will not be allowed to do what they have threatened and freeze out ICL from collaborative research projects.
It remains to be seen whether we shall secure any lasting benefit from our research efforts. Given the dismal track record of the Government and the indifference of Ministers to the problem, I fear that the Department may prove to be a burden too great for industry to bear, and that, while we may secure the short-term benefits of the research fund, there will be no long-term benefit to jobs and products.

Mr. Kenneth Warren: I wish first to declare an interest as I have been involved in the computer industry for many years. Unfortunately, that interest has never led me successfully to obtain any money from any of the programmes, so perhaps I can speak objectively—not that I would not have wished to do so anyway. My experience of watching other people have a go has led me to conclude that people should not have a go unless they have a great deal of money and can afford to bid. The ponderous procedures and the enormous overheads connected with the programmes deny many small businesses the chance of getting any money.
I welcome what my hon. Friend the Minister said. I wish to comment on the programmes as they have been and as they will be. I have one minor pedantic comment to make. The document is stated to be about research and technological development. As an engineer, I always wish that people would stop putting research and development together. There should be no development without production, and research is quite different from development. The overhead structures, the method by which one works and the kind of people used are completely different. People who are associated with development should be associated with production. Running research and development together in the same phrase is the old story of people not understanding how industry should work, and how it does work in the better-run companies.
One notices from the explanatory memorandum that some £1·5 billion has been spent, but there is nothing about what has been done with it or the effectiveness of it. Some of that money was spent as far back as 1984–88. There was some £500 million of Community support with probably an equal amount of industrial investment as well. It would be helpful if the Minister, perhaps not tonight, would be so kind as to look at the need to deploy the quality of results that have been achieved so that one can learn from the value of the investment. It worries me that we are charging forward from 1992 onwards with a suggestion of further substantial sums, which might be correct. When I see moneys rounded off to £500 million and £1·25 billion, I think that there has not been enough investigation about the proposals that the Commission has in mind based on its knowledge of the reality of business and investment.
I notice that the explanatory memorandum says that the scope of the instrument is broadened so that co-operation with third countries, including those outside the European Free Trade Association, may be promoted. The hon. Member for Kirkcaldy (Dr. Moonie) spoke


about ICL and it would be helpful to know whether Fujitsu is allowed to bid directly or whether it has to go through ICL and whether ICL is allowed to bid. The Minister may want to consider that rather than refer to it tonight.
On the policy implications of the investment sums involved, the explanatory memorandum says that there are issues on which there will be further discussions, such as the underlying rationale of priorities of the programme. That is putting the cart before the horse. The rationale of priorities should be identified before sums of money can possibly be talked about. We should vote on the rationale of priorities and then vote on the sums of money.
The explanatory memorandum illustrates once again the kind of problems that one runs up against when one looks at Euro-legislation from Brussels. The document published on 1 June uses the kind of verbiage that cannot be taken seriously. For example, "whereas" appears 12 times. In the articles there is no description of what one will be doing, and eventually one reaches page 12 and a reference to the JESSI programme, which at that time had just about collapsed. What is proposed for two years hence on a programme that has already gone into the sand?
The document goes on to talk about work being addressed
to the major components of the chain of designing, manufacturing, testing and applying advanced semiconductor products.
Again, we are looking at something some years ahead which, with great respect to these wonderful gentlemen in Brussels, has already been in action in Austin in Texas for the past two years. They should take off their blinkers and look more widely at what is happening in the world of information technology, including communications.
I recognise that my hon. Friend the Minister said that we should concentrate more on software, but it grieves me considerably that there should be no reference to the more advanced types of microelectronics, for example based on gallium arsenide technology.
My hon. Friend is right about software, but we must take the software problem by the throat and shake it. When the Select Committee on Trade and Industry, of which I have the honour to be Chairman, looked at information technology 18 months ago, we visited Japan and the Japanese gave us a clear understanding that by the year 2000 all the population aged from 20 to 30 in Japan would be engaged on software production. Something is wrong somewhere. I acknowledge that software, as opposed to hardware, is becoming an increasingly large component of any given system, but I nevertheless hope that we can secure what the document originally asked for. We need to introduce some rationale into the proposals rather than just voting money.
It seems that it is only late at night that we debate the important subject of the workings of the European Community and what it should be doing. The debate before this lasted only 90 minutes, more's the pity, but we cannot return to it. As far as I could see, none of the documents—and none of the other documents dealing with science and technology that we have discussed—mentions the needs of users, to which the Minister very properly referred. Those needs must predominate: this must be a market-led business operation or it is nothing.
More attention should be paid to standards and technical norms, which are not given the priority that they deserve. Given the leadership of the market from research stage to production and development stages, we ought to get the prime users in the Community together. I believe that they could instil in the nations and companies participating—and seeking to participate—in the programme the understanding that the Community's main market is the public sector.
Our Government spend some £4 billion a year on hardware and software for the application—civil and military—of information technology, excluding communications. Half that is spent in the civil sector. The Select Committee tried to persuade the Department of Trade and Industry and the excellent Ministers who were there at the time—I am sure that the even better Ministers who are there now will pay attention to this splendid suggestion—that industry could be given a good deal of leadership if the Government saw themselves as a customer. Given the quality of their purchasing, the Government would indeed find themselves leading their industry forward, enabling it to obtain the investment that it should be granted and, as a result, the success that it deserves.
I commend the work that is being done, but I am afraid that the scepticism of experience always shines through.

Mr. Redwood: I am grateful to my hon. Friend the Member for Hastings and Rye (Mr. Warren) for his comments. We are debating an issue that will come before the Research Council, probably in the early spring of next year; my hon. Friend's comments will be very helpful to my noble Friend Lord Hesketh, the Minister for Industry, who will be negotiating on our behalf. The Government agree that rationale is needed in the proposals and that is what we are injecting into the debate, as I tried to explain at the outset. I agree with my hon. Friend the Member for Hastings and Rye that research is different from development. The purpose of this programme is to finance research rather than development.
My hon. Friend raised the crucial issue of effectiveness. This is indeed a vital issue of great concern to the United Kingdom Government. We believe that our proposals will improve the effectiveness of the programmes and will tackle the just elements of the criticisms voiced comparatively recently in, for example, the Financial Times. That paper made some points that we feel are reflected in our negotiating position; we do not, however, agree with some of the others.
In the past, such research programmes have eventually produced results in terms of products and market developments, but we should bear it in mind that the programme is in its earliest phase and is not designed to produce products directly. Monolight, a small company that benefited from a previous programme, produced an optical spectrum analyser as a result of initial work.
Can ICL, in the United Kingdom, gain access to the funds? Yes, we are told by the Commission that it is still eligible to enter into collaboration with others and bid for the funds in the usual way. We have made that an important part of our negotiations with the Community. I cannot say how easy it is to form collaborative ventures. That is a matter for private sector companies. However, we regard them as wholly United Kingdom companies, as


they always were, and as full participants. Therefore we shall do all that we can to ensure that they remain full participants.
The hon. Member for Kirkcaldy (Dr. Moonie) referred to the JESSI project. The board has approved 54 projects to date, 26 of which involve the United Kingdom. Those involved find the projects useful. I agree with my hon. Friend the Member for Hastings and Rye that leadership can be important when the Government are the customer. We shall bear that in mind when considering our procurement policies.
I am glad that the Opposition acknowledge so many good features. They acknowledge that there are many inward investors. It shows that the policies are working and that we are creating exactly the right climate for information technology and its related areas. What good news it is that IBM intends to add to its massive investment here its worldwide telecommunications headquarters. They are to be here in London. It is a sure sign that our industrial policies, based on liberalisation and trusting the market, are doing well.
We welcome Fujitsu's commitments, as does the hon. Member for Kirkcaldy. I am glad that he acknowledged them.

Dr. Moonie: Will the Minister reflect on our balance of trade with the rest of the world in information technology and how it has progressed during the last few years?

Mr. Redwood: I am glad that the hon. Gentleman asked that question. Last year we ran a £900 million surplus in investment technology with the other EC countries. I am sure that he will agree that that is a fine achievement. I am glad that he welcomes the size of the programme. He suggests that we are inactive nationally. That is untrue. We have national programmes, too. The proportion of

Government expenditure on research and development is higher than that in Japan and the United States. I am sure that the hon. Gentleman agrees that Japan is also successful in this area.
During the summer of 1990 we announced a national research and development programme in safety critical software. We are encouraging industrial and academic collaboration. We have considerable strengths in that area.
Our policies are creating the right climate and background for a very strong industry in this country. I commend the proposals and our negotiating position to the House.

Question put and agreed to.

Resolved,
That this House takes note of European Community Document No. 6864/90 on a Research and Development programme on Information Technology; and endorses the Government's view that Community support for research in this area should be given a high priority.

ESTIMATES

Resolved,
That this House agrees with the Report [4th December] of the Liaison Committee.—[Mr. Lightbown.]

EUROPEAN COMMUNITY DOCUMENTS

Ordered,
That, notwithstanding the provisions of Standing Order No. 102 (European Standing Committees), if the proposals described in the un-numbered Explanatory Memoranda submitted by the Ministry of Agriculture, Fisheries and Food on 11th December 1990 relating to Total Allowable Catches and Quotas for 1991 and relating to the reciprocal fisheries Agreement between the Community and Norway for 1991 are recommended by the Select Committee on European Legislation for further consideration, the said proposals shall not stand referred to a European Standing Committee.— [Mr. Lightbown.]

Independent Living Fund

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lightbown]

Mr. John McFall: It is my privilege and pleasure to speak on behalf of two of my constituents with regard to the independent living fund. That fund has been a victim of its own success. I refer the Minister to the ninth report of the Social Services Committee on community care. I echo what the Select Committee says in paragraphs 62 to 88—that the Government have not fully appreciated the innovation of the independent living fund in giving some disabled people and their families the resources to build up their own care packages. I ask the Minister to endorse what is said in the ninth report by establishing the ILF as an independent body.
Disabled people are now asserting their right to live as equal and independent citizens in the community, but to be independent and equal requires opportunity and resources. Since 1988, the independent living fund has given people the opportunity and the resources to live independently within the community, to participate on an equal basis and to contribute both economically and socially to the life of the community. Not only has the ILF provided the opportunity and resources for independent living; many will also testify to the undoubted fact that the ILF has also secured the preservation of their lives and liberty and has enabled them to gain much happiness, all of which is considered to be essential for a good quality of life.
However, the independent living fund is now doomed to close in 1992. I am armed with a petition signed by 4,000 of my constituents which expresses their deep concern about the future of the ILF. Those 4,000 citizens believe that such moneys to maintain severely disabled people in the community should be given as of right to those who need it under the social security system to ensure uniform provision throughout the United Kingdom.
To date, the Minister and the Government have been deaf to that suggestion, so my constituents decided to arrange this petition and to present it to me after seeing the plight of Jim and Monica Elder Woodward. The main force behind the petition was a lady called Betty Campbell of Dalvait road, Balloch, in my constituency. She was ably assisted by Brenda Newton of Halketh crescent. Alexandria, who was equally determined that these signatures should be presented to Parliament, and that I should do that on their behalf. I have received tremendous support from the workers at factories in my constituency, from the Polaroid factory, from the Vale of Leven district hospital, from the Whisky Bonds, and from post offices and general practitioners' surgeries. The parish priest at the church that Monica Elder Woodward attends has also given his support.
All those people are urging the Minister to reconsider because, without the independent living fund, more than 6,000 people would have to leave their own communities and live in socially isolated residential care at a cost of between £250 and £1,000 per week. The average cost to the ILF of providing help is £72. I quote that figure from the Minister's comments in Committee yesterday. Therefore, even if the Minister disregards the humanitarian case, there is a sound economic case for continuing the ILF. As the Minister said yesterday:

That is a clearly good value for money, as an alternative to someone going into institutional care."—[Official Report, Standing Committee E, 11 December 1990; c. 62.]
With the ILF, disabled people can organise their own care plans exactly to their needs. The care plan is developed with them, and they have control of the decision-making process. The care plans are also more appropriate and flexible than most local authority services, so disabled people can do more what they would like to do. They can mix with others of their choosing or enjoy their own company. The choice is theirs. Surely that is an eminently sensible Tory principle.
That new approach has been possible because, since 1988, frightened at the chaos that ensued after the social security changes, the Department worked with the Disablement Income Group to set up the independent living fund as a charity. The Minister knows that the ILF is not perfect, and DIG has told me that itself. Although the charity expedites independent living, it is nonetheless a charity and, because of those nuances, it cannot treat its recipients as equals. Disabled people regard that as the downside of the ILF. As its war cry states, they want "Rights, not Charity."
However, the Government now want to close the ILF and to transfer the responsibility to local authorities through the proposed community care legislation. That is a real cheek, from a Government who have passed 40 separate pieces of legislation against local authorities and who have tied and buckled them. The Government benignly say that local authorities will look after community care. That is nothing less than abdication by the Government, and it will have a disastrous effect on those affected.
As I have said, Jim and Monica Elder Woodward are a severely disabled husband and wife who live in my constituency and who are beneficiaries of the independent living fund. The husband works full time for social services, helping other disabled people. He has cerebral palsy; nevertheless, he is contributing economically, socially and politically to the life of his community. He is paying his taxes—even the poll tax, despite the fact that the rates recognised the additional costs and needs of disability, which the present insensitive levy does not.
The wife, Monica, has multiple sclerosis and is even more severely disabled. Her case was on Scottish Television tonight, when every viewer saw exactly how disabled she was and how dependent she was on the ILF. She has been given many electronic aids to reading and writing by the Open university because it recognises her brilliant mathematical skills. She already has two degrees —one in architecture, the other in social sciences. She is also a qualified social worker, having had responsibility for the development of services for disabled people in an English local authority.
Together, they enjoy music, the theatre and the arts. Together, they reinforce and respect each other's separate interests. The husband's interest is local and Scottish history. He is no Christy Nolan, but he also tries to write. His first book about disability will be published soon. His wife unwinds from mathematical problems by reading the New Scientist. Together, they make a fine, happy, loving couple.
But all that is possible only through a network of devoted helpers who come in at different times of the day to accomplish different tasks, from shopping to toileting —the network being wholly dependent on the ILF. There


is no guarantee that the local authority will take on the ILF's commitment of £170 a week to support the two of them, and that is the core of their concern. They have made a pact: if one goes into a residential home, the other will give up work, the house and the dog and follow, just to be together.
That is what the Government are driving people to consider seriously. That is why I am armed with 4,000 signatures from my constituency, spontaneously given by people who are concerned about the likes of Jim and Monica Elder Woodward. Such people have to consider giving up home, family and work, to live a life in sterile institutionalisation. They have a good future together in the community, if they have the resources to secure their support network. Without those resources, their future lies with aseptic hospital wards or barns of "homes for the incurable".
The ILF, this life-saving, life-enhancing system of community support for so many, and potentially so many more, is a victim of its success. It warranted only one paragraph in the White Paper on community care. It was dismissed without a thought as the responsibility of local government. Jim and Monica Elder Woodward want to eliminate the historical tendency for disabled people to be regarded as mere objects of charity.
Disability is a social phenomenon, created by the way in which the environment is built, by attitudes shown towards disabled people, by the structure of organisations, as well as by organisational behaviour. Disabled people are disabled not because they have cerebral palsy or MS, but by steps and doorways, by people saying, "No." and, "Go away," and by the inflexible systems and rules which overlook their specific needs. It is society that disables, not the medical condition. Surely it is up to society and its representatives in power, the Government, to break down those barriers and let disabled people in. All they are asking for are the tools to break down these barriers to an independent life in the community.
We in the House have begun by giving them the attendance allowance and mobility allowance. They are being combined in the Government's Bill to establish the disability living allowance, but it will continue the two-tier system of day and night, and day-only attendance allowance. In addition, a new lower rate of £10 will be introduced for those who hitherto did not need enough care to be eligible for the day-only allowance.
The ILF, however, is used to assess exact needs and to pay accordingly. In its present form, it has to operate a means test to ascertain the contribution that the individual has made. Nevertheless, the assessment is based on the practical needs of the individual and the estimated cost of satisfying them, and the cost will vary from individual to individual and from geographic region to region. These factors are not taken into account within the new disability living allowance. Instead of scrapping the uncharitable benefits of the ILF, I urge the Minister to integrate the new disability living allowance with the ILF system of independent living support.
For dismal reading, I refer to the Minister's final remarks in Committee yesterday. He said:
We should still look to the local authorities to undertake the vast majority of cases.
Shortly after that, he said:
We must consider the situation as we approach 1993. I should be extremely reluctant to envisage a situation in which a great gap appeared … disabled people were anxious"—

the Minister is here referring to my remarks—
to have an idea about the arrangements as soon as possible. I am conscious of that and would want to respond to that point but cannot do so this morning."—[Official Report, Standing Committee E, 11 December 1990, c. 63–4.]
Twenty-four hours have passed, and I ask the Minister to "respond to that point". I shall ask the Minister to do so when 48 hours have passed. I shall ask him to respond when four weeks have passed. The issue will not disappear. I am speaking on behalf of many disabled people who want their time to come now. The Minister's statements in Committee, which I have quoted, are insufficient and insulting as they stand. I ask the right hon. Gentleman to make a positive statement tonight. Let him understand that the issue will not go away.

The Minister for Social Security and Disabled People (Mr. Nicholas Scott): Despite the somewhat dramatic urgings of the hon. Member for Dumbarton (Mr. McFall), I welcome the opportunity to advance to a wider forum than that which was available to me yesterday in Committee—I suppose that there were more people assembled yesterday in Committee than there are present in the House tonight, but my remarks now might receive more attention than those made yesterday—some of the arguments which I deployed in response to an amendment which was proposed to the Committee considering the Disability Living Allowance and Disability Working Allowance Bill. If, however, the hon. Gentleman expects me within little more than 24 hours to go further than I went yesterday, he will be disappointed.
I object in a delicate sense to some of the comments of the hon. Member for Dumbarton which implied that the Government are less caring and less sensitive to the needs of disabled people than right hon. and hon. Members who represent the Opposition. We have demonstrated our commitment. The House will, perhaps, be weary of hearing the extent to which we have improved the totality of financial resources available to meet the needs of the long-term sick and disabled during our period of office. The real annual rate of increase is substantially in excess of anything that was achieved by our predecessors—the Labour Government—and the same can be said of the way in which we have extended the scope of, and made more flexible, the care that we give to the long-term sick and disabled.
We are discussing a Bill in Committee that will bring two new important benefits to meet the needs of disabled people. I am sure that in 1993, as planned, we shall be moving to a system of community care that will be much more locally responsive to the needs of the disabled. That is not a bad record, and nor is it a bad prospect when it comes to meeting the needs of the disabled.
I understand that Mr. and Mrs. Elder Woodward are not complaining, and did not complain to the hon. Member for Dumbarton, about the provision that is being made for them through the independent living fund I understand that their concern is about the future of the scheme. I do not know what it was that led the hon. Gentleman to say—I assume that I heard him aright—that the ILF was doomed to end in 1992. I have never said that. To my knowledge, none of my colleagues, and certainly no one from the Treasury Bench, has suggested that the ILF is doomed to end in 1992.

Mr. McFall: Am I correct in thinking that the ILF has a five-year life span and therefore is not its future after 1992 in jeopardy? Can the Minister confirm that it will continue after 1992?

Mr. Scott: The period 1988 to 1992 is four years, not five. Therefore, the independent living fund's current trust deed will run out in June 1993 and that will be some months after the introduction of community care in April 1993. The hon. Gentleman's reference to 1992 may have been a slip of the tongue. The trust actually has a life until mid-1993 and that is beyond the time when we plan to introduce community care.
It might be worthwhile if I remind the House and perhaps a wider audience of the origins of the independent living fund. It was established by the then Department of Health and Social Security in co-operation with the Disablement Income Group and DIG (Scotland). It was set up partly in recognition of the fact that, after the 1988 social security reforms, severely disabled people would no longer be able to claim additional requirements payments, in particular for domestic support.
It was felt that some of the severely disabled people on income support would not be adequately compensated for that loss by the disability premiums that were to be available under the new income support system. At the same time, it was decided that it was necessary to provide help not only with domestic assistance, but also with personal care in order, as the hon. Gentleman said, to enable as many severely disabled people as possible not to have to enter institutional care, but to allow them to sustain their independence within their own homes with the support of their families or local communities. It was hoped that as many as possible would be able to achieve that aim with which all hon. Members would be sympathetic.
The fund, with cases examined individually under the guidance of independent trustees, offered an opportunity to deal flexibly and sensitively with that small group of people in a way that simply was not possible under the mainstream benefit system.
As I understood it, the hon. Gentleman was advocating that the ILF, either in the near future or certainly before its life expired, should be incorporated into the disability living allowance and, in effect, placed on a statutory basis. As I argued in Standing Committee E yesterday, I do not believe that that would be sensible or practical or would have a chance of meeting the needs of disabled people either as they are met presently under the ILF or will be met under the terms of the community care policy after 1993.
I will explain why I believe that by referring to an example I gave to the Standing Committee yesterday. The fund copes with about 7,000 individuals in a sensitive and flexible manner. We must set that against nearly 1 million people who, by 1992 or 1993, would be receiving either attendance allowance or the care component of the disability living allowance. There are in essence two concepts that do not come together in any real way. First, there is the statutory provision of attendance allowance —and the care component in due course of DLA—which gives a broad level of support as of right to a large number of people, as I said, about 1 million. That does not attempt to reflect the actual costs of disability of any individual,

but it recognises that extra costs arise from particular levels of disability and that the state should recognise that and make payment in respect of it.
Secondly, against that, the independent living fund deals with a fraction of that number—as I said, about 7,000. It deals with them with discretion in a way that reflects the care needs and costs of the individuals or couples concerned. It is flexible, sympathetic and discretionary and the ILF trustees, staff and social workers work expertly on their behalf in a way in which no Department of Social Security office—there are 500 in the country—could conceivably respond to those needs.
Whatever differences we may have about the future, I ask the hon. Gentleman to recognise that, to attempt to incorporate such specialised provision for a relatively small minority of severely disabled people into the generality of the social security system or the care component of DLA, which is obviously a fraction of that, would simply not meet the needs of disabled people. Having served in a previous incarnation, Mr. Deputy Speaker, in the former Department of Health and Social Security, you will recognise the difficulties of drafting regulations that could reflect the flexibility that has been shown by the trustees and staff of the independent living fund. The hon. Gentleman is going up a false alley in making his suggestions. Perhaps he wants to look forward to a time when we have a long-term and developing role for the independent living fund. However, I take issue with his suggestion that, in some way, the Government are not fulfilling their duty to the fund.
Having returned from across the water, when I first confronted the situation that was to follow the 1988 reforms, and I could see a gap opening, I went to the then Chief Secretary to the Treasury, my right hon. Friend the Prime Minister, and asked him for some money for that purpose. We set up the fund with £5 million. In the first year, only £1 million was spent on the independent living fund. Now, only three years later, we are making provision in the current year for £32 million for the fund, and £62 million next year. We have recognised that there is a need, and we have been able to respond in that dramatically increased way to meet it.
It has become increasingly clear that it is more difficult for the trustees, staff and others involved with the independent living fund to meet the burdens placed upon them by the substantial increase in the caseload. If the hon. Gentleman will look back fairly, he will note that the Government, voluntary organisations and so on were dealing with a few hundred people. The number has turned out to be a few thousand, and, as the word has got around, it looks set to increase further as the months and years go by. We have made additional provision, but we must be prepared to look ahead to what the long-term pattern of care should be.
It is worth registering the fact that the independent living fund is not the only source of help for disabled people. There also are flat-rate benefits within the social security system. There is already help from local authorities and health authorities. I suspect that some have been pushing some of what should be their caseload on to the shoulders of the independent living fund. Voluntary organisations, families, friends and so on could play their part in helping disabled people and provide the help that they need to maintain their independence. Also, some of the best provision is to be gained from a partnership between family, friends, community, and statutory,


voluntary and other agencies. They can put together a comprehensive support package to enable individuals and couples to sustain their independence.
We have put forward proposals in our White Paper, "Caring for People", which, together with the National Health Service and Community Care Act 1990, set out the Government's policy framework for community care in the next decade and beyond. I do not want to go through that tonight, but we must accept two propositions: first, that the general social security system is not flexible or responsive enough to cope with the needs of that small group of people; secondly, that the number who are dependent upon support from the ILF is now growing to the extent that it is difficult for the ILF, the trustees, the staff and the social workers to bear the burden.
The sensible way forward, which is favoured by the Government, is for the decisions about support for such severely disabled people to be devolved to local level. There will be a transfer from the Department of Social Security, through the Department of the Environment, to local authorities to enable them to cope with those problems.
A local authority or a health authority should be able to assess the needs of individual disabled people in their locality. They could then decide on the care package that is needed to ensure that those individuals can maintain their independence in the community. The authorities should be financially neutral about such decisions so that

there is no particular financial advantage to be gained from those decisions. That should be the best way to determine the matter.
As we approach 1993 and the implementation of care in the community policies, the ILF will still be going. It will, however, have built up a caseload that is substantially greater than the existing one. It is impossible to conceive that, on some particular date in 1993, the whole burden for the ILF will be transferred to local authorities. Some transitional period must be set and even a point at which some further cases are accepted.
In response to the hon. Gentleman's plea, may I say that it should be the proper expectation that, after a particular date, local authorities—with the support or otherwise of health authorities—should be able to assess the needs of individual disabled people to enable them to acquire independence. I also hope that some beneficiaries will be able to play a more active part in their care management. They should be able to assume responsibility for the day-to-day management of their carers—that has been a particular feature of the success of the ILF. Even though local authorities are unable to make cash payments in lieu of services, such responsibility would induce a great degree of choice. That is the best way forward on such a sensitive and difficult issue.
I look forward to sharing exchanges on this subject with the hon. Gentleman in the coming months.

Question put and agreed to.

Adjourned accordingly at eight minutes to One o'clock.